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4 helpful tips to keep your Bitcoin safe

·3-min read
A traditional wallet with cryptocurrency coins falling out of it and a phone screen showing a digital wallet.
A traditional wallet with cryptocurrency coins falling out of it and a phone screen showing a digital wallet.

We’ve all heard the horror stories.

There was the crypto investor who forgot his password to his coin wallet - and lost $303 million worth of Bitcoin. Then there were the two brothers and co-creators of crypto platform Africrypt that took off with a whopping US$3.6 billion (AU$4.88 billion) worth of their investors’ Bitcoin. And let’s not forget the scary statistic that cryptocurrency crimes rose 67 per cent in 2020.

Because the nature of cryptocurrency is that it’s a digital asset, it’s subject to all the risks and threats that normally affect anything online. This is how the crypto-world has earned its reputation for being a bit of a cowboy’s country.

And while this can be enough to put even the more riskier investors off, there are four tips and tricks to keeping your Bitcoin safe.

Always use a secure platform

Unlike actual cash, which can be taken out of the bank and stored in a safe at home, Bitcoins don’t exist in a physical capacity, which means you can’t store them anywhere. However, you can keep your Bitcoin in online wallets, which are like bank accounts for crypto.

When choosing the platform you use to buy, sell and store crypto on, you always want to make sure it’s secure.

In Australia, our regulators have done a lot of the hard yards for us. According to Canstar, all digital currency exchanges need to be registered with AUSTRAC - the nation’s financial crime watchdog. If a platform is registered with AUSTRAC, it means it’s compliant with anti-money laundering standards and security.

Some platforms will even link themselves to some non-government organisations, like Blockchain Australia, which means they advocate for the adoption of blockchain technology in Australia and good regulation and policy around the industry.

Keep your passwords safe

Again, because Bitcoin is stored online, it’s more susceptible to hackers and cyber-criminals.

This means keeping your passwords offline is extremely important. This means writing your password down and keeping it safe somewhere. However, if you’re going to do this, you need to put it somewhere you’re going to remember.

If you get locked out of your wallet, your Bitcoin is gone for good. So, ensure you file your password away with other important documents, so you don’t end up losing your investments entirely.

This goes for your Bitcoin backup passphrase, or your recovery seed, too. This is a phrase of random words that some platforms will provide you with, in case you forget your Bitcoin password. It usually makes no sense, and is extremely hard to remember off by heart - so write it down.

Use 2FA always

A lot of Bitcoin platforms will provide you with the option to use two factor authentication - also known as 2FA.

This is where you have a separate app, like Duo Mobile, that is linked to your account.

Whenever you go to log into your Bitcoin wallet, you’ll be asked to also provide a one-off code from your other 2FA app. This means if someone’s trying to get into your app, you’ll be notified via your 2FA app, and they won’t be able to get in without the extra code.

Keep your software up-to-date

Software updates can have important privacy or security features that could potentially stop your wallet from being hacked, according to Bitcoin.org.

And it’s not just the software for your bitcoin wallet - your mobile or laptop device software also needs to be up to scratch too.

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