With the increased use of bitcoin, the number of thefts and cyberattacks has increased on crypto wallets and exchanges. Cryptocurrencies are here for the long term now. Today even some countries have allowed people to use cryptocurrencies under financial regulations and tax laws. Instead of completely banning cryptocurrencies, countries have passed measures to limit their use due to price volatility and use it for illegal practices like money laundering. But why should you care about bitcoin?
Due to the volatility of bitcoin, there are many companies that have restricted bitcoin payments. But some popular companies like Tesla, Microsoft, Overstock, and PayPal are still accepting bitcoin payments. The use of bitcoin is increasing because of its increasing popularity. Another major benefit that merchants get is the low-cost transactions that bitcoin offers, and it also reduces the risk of chargebacks. Another main benefit that customers get is that they aren’t required to provide personal information like name, address, or bank account details. This also increases the privacy of customers, and this also reduces the risk of identity theft.
How secure is bitcoin?
There are several elements that secure bitcoin from cyber-attacks and theft. Cryptography controls the transfer and creation of cryptocurrencies, and the protocols that are the basis of bitcoin have proved it strong. Bitcoin uses decentralized distributed ledger technology that is known as the blockchain. Blockchain provides owners a complete record of bitcoin transactions that cannot be manipulated as there is then no point of failure. The decentralized ledger technology provides transparency which means that transactions are public, but still, it provides anonymity to every user, which provides no chance for hackers to hack the data.
However, the strength of blockchain can still stop attackers from making cyber-attacks within wallets and crypto exchanges. Crypto wallets are software that store bitcoins on smartphones and computers, and crypto-wallets are platforms that allow customers to buy, sell, and trade cryptocurrencies for traditional as well as digital currencies. Neither crypto exchanges nor crypto wallets provide security and insurance to users to store their money as banks provide. As the value of bitcoin is increasing, the number of thefts and cyber-attacks is also increasing.
There have been many crypto-mining malware attacks as well that are referred to as crypto jacking. These types of attacks curse internet users with the power of their devices, and all other resources get hijacked to mine bitcoin and other cryptocurrencies.
How can you secure a digital wallet?
Despite the increasing cases of cyber-attacks, the crypto wallets developed are offering more security and best practices to ensure the security of bitcoins. Let us learn about different types of bitcoin wallets that are as follows:
Offline wallet
Offline wallets are cold wallets that are kept offline, making them secure compared to online wallets. For hackers, it is quite easy to hack online wallets, whereas it is challenging for them to steal bitcoins from offline wallets as they would need access to your passwords or PINs to access your funds.
Hardware wallet
Hardware wallets offer the same kind of security as cold wallets. Hardware wallets are physical devices that store private keys and keep them secure. Your private keys will never get exposed with a hardware wallet as the signing of bitcoin transactions is completed by involving the device. But hardware wallets are costly, and also, it is important to choose the right one that offers you more security and provides access to your private keys without involving any third party.
Software wallet
As we have read, there are mainly two types of wallets: hot wallets and cold wallets. Software wallets are internet-connected wallets that are only suitable for your daily uses. You must only keep a small number of bitcoins in your software wallet. For other balances, you must get a cold wallet that is safe to store a large number of bitcoins.
Paper wallet
