The use of cryptocurrencies like Bitcoin and Ethereum for day-to-day activities such as commerce, trade, investment, gaming, and online casino activities is expanding at a faster rate globally especially in nations with lower and middle incomes. In these nations, people are turning to cryptocurrencies as a way to store their savings and send money to family members living abroad. Cryptocurrency also acts as a substitute for traditional financial services that are difficult to obtain.
As a result of this, new products and services for crypto users and newcomers are now being developed. However, the widespread adoption and use of cryptocurrencies have led to a rise in the number of related attacks and robberies. Those who would do you harm are already plotting how to steal your Bitcoin, the moment you buy it.
Exchanges and other internet businesses are common targets for hackers who steal money, and malware and other security risks also steal money from regular customers. According to Chainalysis’ yearly review of cryptocurrency theft, the total value of crypto stolen in 2022 was $3.8 billion, making it the worst year yet. To keep your Bitcoins secure, you need to familiarize yourself with the underlying architecture of the Bitcoin network.
Cryptography
In mathematics, cryptography refers to a broad area with many different approaches to keeping data secure and private online. Cryptography is the study of secret codes and their deciphering, hash functions, and digital signature methods. Bitcoin is considered a cryptocurrency since it employs encryption. This is to function as a decentralized currency and facilitate wholly digital peer-to-peer transactions.
Cryptography, which has been around for nearly as long as written language, is the practice of encoding messages or data so that only the intended recipients can decipher them. Bitcoin is hardly unique among technologies that make use of cryptography. Several institutions and services rely on cryptography to ensure the safety of their data. This includes those that require users to enter passwords, like smartphones and computers.
These days, only the most basic gadgets don’t employ cryptography to secure their data and confirm their identities online. Those that operate within the government, and those that provide financial and banking services also rely on cryptography.
Bitcoin, a digital currency, employs a type of cryptography known as public-key cryptography. When it comes to the issues of address with BTC, cryptography plays a notable part. A BTC shared address could also be similar to a public key if looked at from the perspective of our necessities. The majority of cryptocurrencies in use today make use of methods that are very similar to one another, and Litecoin is one of the numerous cryptocurrencies that uses this technique to produce addresses with 64 characters.
What Is a Public Key?
A public key is required for you to be able to accept payments in bitcoin. This is a series of cryptographic symbols that is somehow related to a private key. As the owner of the crypto asset, you can “Unlock” and claim transactions someone else might have locked on your public key. To receive payments, the public key is needed, and this is often represented by an address, which is merely a condensed version of your public key.
Knowing this, there is no need for you to feel uneasy about disseminating your public key. It’s possible that when browsing the internet, you’ve come across donation pages for online content providers or charitable organizations that featured the public keys for their cryptocurrency addresses. Although anyone can make a financial contribution, only the person who possesses the private key will be able to access the cash once people have contributed.
A Private Key
The opposite of the former, this one however should never be made public to anyone. Having a private key for your public address allows you to use it as proof of ownership, and to access the cash associated with it. There are numerous implementations of private keys, including:
- 256-character long binary code
- 64-digit hexadecimal code
- QR code
- Mnemonic phrase
A private key, in whatever form it takes, is an extremely huge number, and it is so for good reasons. Although it is possible to get a public key from a private key, the reversal is extremely difficult due to the one-way “trap-door” function. In addition, an unlimited number of public keys can be related to one private key.
Every address, similarly called a public key, is endowed with its private key. Using the private key, you can get your hands on any funds sent to a specific public address. This emphasizes the crucial essence of preserving the safety of your private keys. The confidentiality associated with the key gives minimal worry and helps safe keep assets from theft.
Securing Private Keys
Keeping your Bitcoin safe is as simple as using a password with your Bitcoin wallet’s built-in password function. It’s important to take as many protections as possible because malicious software and hackers will go to considerable lengths to get at your coin stash. Some of the options available to rather safe keep your keys are;
If possible, a unique address should be used
Addresses are less vulnerable to theft if they are rarely used. Unfortunately, this isn’t always a viable option. That’s why it’s a bad idea to keep private keys in text files or any place and for any reason. Given this, a cryptographic vault is the best option for securing private keys. An alternative to using a private key is moving the funds from the old address to the new wallet via the network.
Use secure computers
For the sake of your financial security, you should keep securing any computer you use to transfer or receive Bitcoins. Malwarebytes or Avast, for example, should be installed and kept up-to-date on every computer running a commercial OS like Windows or macOS. Online attacks typically target computers running vulnerable Windows versions.
Only keep what you need in your wallet
Why hoard your wealth if you can spread it around in different places? As a result, the stakes are higher if your security measures fail. Some services let you generate a safe, offline address for funds you won’t need access to right away. If you need to access funds in your hot wallet in the future, this is the private key you will use to do so.
Reduce your reliance on mobile devices
It’s entertaining to use a mobile wallet, but it’s madness to save more money there than the phone is worth. To keep your Bitcoin somewhat safe in the event that your phone is lost, stolen, or flushed down the toilet, it is recommended that you keep a minimal amount in a mobile wallet.
Do not rely on online services
Services that provide online wallets are simple to operate. However, one of the fundamental principles underlying Bitcoin is the idea that users should act as their banks. While Stake takes every effort to protect your account and provides you with wonderful options to protect your account, such as two-factor authentication, it is still possible for your account to be compromised.
In layman’s terms, 2-factor authentication makes everything about storing bitcoin easier and more secure. This includes the storage of bitcoin itself.
You, as opposed to the service in question, will likely be the one whose security is breached in the majority of cases.
Hardware Wallets
When you’re not actively trading cryptocurrency, keeping your crypto wallet offline (in a cold wallet) on a piece of hardware can be the most secure alternative. There will be no risk of a hacker or malware infiltrating the wallet when it is offline. You may also use the physical device to authorize transactions with popular solutions from businesses like Ledger, Trezor, and SafePal.
A connection to a phone or computer and the internet is required for exchanging crypto, but the private key is never transmitted. This means that even if the device to which your wallet is attached is stolen, your funds will still be safe in your wallet. You can also keep backups of your seed phrase in non-computerized places, like a fireproof safe or a safe made of solid metal.
They require you to enter your seed phrase into a software wallet every time you wish to access your cryptocurrency, which is inconvenient for regular traders.
Hardware wallets (and noncustodial software wallets) have the major problem of putting all the responsibility for your wallet’s security on your shoulders. Seed phrases are used to restore wallets in the event of hardware wallet loss or software wallet lockout. Nevertheless, if you misplace your seed phrase, you may never again have access to your crypto.
Hardware wallets are a fantastic method to preserve your bitcoins, and the manufacturers will go to great lengths to support you if you have a large enough Bitcoin holding to warrant the investment. You may compare these many hardware wallet options here.:
Ledger
When you hold a cryptocurrency, what you are really in possession of is a private key that grants you access to the coins you have purchased. You should not let anybody else have access to this key, and you are responsible for ensuring its safety at all times. A solid choice for storage is a Ledger hardware wallet that is paired with the Ledger Live mobile application.
Your private key is stored in a chip that is verified to be safe in your hardware wallet, where it remains safe at all times. You are the only person who can access it. You are also given the ability to independently manage your cryptocurrency holdings when you use a Ledger wallet.
It comes with the Ledger Live app, which allows you to purchase and sell cryptocurrency as well as develop your cryptocurrency holdings in a safe and secure environment.
Trezor
Hardware wallets from Trezor take care of the technical aspects of establishing and managing your keys on your behalf. What exactly does one do with a hardware wallet?
You can consider your Trezor to be your key manager if you choose. As a Trezor user, one of the most essential things you can do is ensure that your recovery seed is kept secure at all times. This is in addition to safeguarding the device itself.
Trezor will use your recovery seed, do the following:
Help you generate a public key using your private key to complete the creation of a key pair.
Help you generate addresses to receive Bitcoin and other cryptocurrencies using your public key.
The fact that private keys are kept within the hardware wallet at all times and may be physically protected by the owner is perhaps the most valuable characteristic of these types of wallets.
KeepKey
This is a prevalent hardware wallet that is compatible with many of the common crypto assets available in the crypto world. It can contain assets like; BTC, BTC Cash, Litecoin, Dash, Dogecoin, 46 ERC-20 tokens, and Ethereum. It was developed by KeepSafe Corporation and conducts its safekeeping duties by using its own hardware-based random number generator in conjunction with the randomness provided by your computer.
The result is a BTC private key for your usage. KeepKey operates without an operating system, this means that the popular layers that can be helpless to attacks from viruses, malware, or keyloggers are non-existent. This makes KeepKey immune to the effects of such threats.
This product guarantees the safekeeping of all private or personal keys by deterring them from being lifted off the device. Furthermore, the KeepKey is fortified with a unique personal identification number, PIN which also helps make it useless to anyone without the PIN if misplaced or stolen.
