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Safely storing your Bitcoin savings in your wallet

The first question that miners ask, after getting acquainted with digital currency, is how to store a cryptocurrency that has no physical embodiment? Actually, for this, virtual wallets were created, the safety of storing crypto-savings in them and will be discussed in this article.

An electronic wallet for Bitcoin (and other alternative monetary units) is software designed to store coins, send and receive them. For users with specialized knowledge in this segment, the developers offer additional options. This is what a Bitcoin wallet is for the average user. In addition to storing funds, a digital wallet contains archival information about all transactions that are carried out on the network by its owner. Considering the increased interest of users in saving cryptocurrency, this article will focus on the main issues of wallet security. The concept of a virtual wallet number will also be discussed.

What is a Bitcoin wallet number?

To identify the user in the payment system, the Bitcoin wallet number is used, which is the address. The owner can bind an unlimited number of addresses to his wallet, but the code number assigned during registration (a kind of analogue of a citizens personal number, which remains unchanged after losing or changing a passport) cannot be changed to another.

Technically speaking, a Bitcoin address is represented as a random set of letters (English) and numbers. For example, it may look like this: 121tWpb8K1S456H9Zx6rewF9WQrcZv564W. Especially for mobile gadgets, the same number can be converted into a QR code.

A wallet program is used to create a Bitcoin number (address). In all wallets, the procedure is performed in a standard way through the "create a new address" tab. In addition, there are special programs designed to generate an address without an Internet connection. In the future, the new Bitcoin wallet number can be imported into your personal wallet.

Based on this, it is possible to define what a cryptocurrency phenomenon is like a Bitcoin wallet, regardless of where it is stored. So, a Bitcoin wallet consists of two alphanumeric combinations (keys), one of which is public, and the other is intended for signature by the owner.

These keys form the Bitcoin wallet number, confirming the authority to make payments. In order to achieve maximum confidentiality, it is recommended to create different addresses, and for each separate transaction. Their number is unlimited. The address is the only information that the payer needs to know in order to transfer funds.

Regardless of whether you use an online Bitcoin wallet or a cold storage method for virtual cash, the number of addresses is unlimited.

All addresses are stored on the wallet and can be used for transactions. Each new address weighs 0.5 KB and takes up the minimum amount of space. If the user creates a number and receives a transfer to it, and then restores an earlier version of the wallet, he will permanently lose access to the coins at the new address.

Also a very important detail is the accuracy of the operations. The best way to use the Bitcoin wallet number is to copy it to the clipboard. It is important to make sure that no spaces are copied with the address: before and after the alphanumeric code. If the user enters characters manually, then it is necessary to be case sensitive. Payments in the system are non-refundable. Therefore, before sending you should carefully check the correctness of the number.

In cases where an erroneous transfer is made to a non-existent address, funds will be returned. But, if the account number exists, the transaction cannot be canceled. The important thing is that the Bitcoin wallet number is not an account or the wallet itself, but just a confidential identifier intended for making a transfer.

Cryptocurrency security: general concepts

 At the present stage of the creation of cryptocurrencies, and even more so, given the fact that the price of Bitcoin continues to grow in leaps and bounds, one of the main issues is security. An increasing number of users place strict requirements on software products. The days when a user-friendly interface came to the fore are long gone. Today, developers are trying to find a compromise between how to exclude hacking of the Bitcoin wallet and provide the user with ease of interaction with the machine.

The user, first of all, needs to decide why he plans to buy Bitcoins. Only in this way can you choose the most optimal way to secure your crypto-savings. There are three ways to store Bitcoins:

    Custodian organizations.These include depository, exchange, investment and other institutions that accept funds for safekeeping. In general, this method offers the same security guarantees as an online Bitcoin wallet, since there is a risk of bankruptcy or theft of funds.
    Cold storage. This method is used quite often and provides for the storage of funds offline. For this, digital media and other material objects can be used.
    Purse. This option is the most common and allows you to store your savings in places that are inaccessible to hackers. A special program allows you to place cryptocurrency in a Bitcoin wallet online on third-party servers, or on a personal computer.

Modern wallets, which are created by specialists, correspond to the level of banking systems in terms of security class.
Hacking a wallet is possible

 Considering the cost of one Bitcoin, the interest of fraudsters in this currency is growing every day. For example, in 2014, attackers robbed the Mt Gox exchange, taking with them 7% of all Bitcoins that were issued at that time. As of 2014, the amount of stolen funds amounted to almost half a billion dollars. Some time later, the exchange declared itself bankrupt, despite the fact that about 20% of the cryptocurrency was found. It is quite obvious that the Bitcoin wallet was hacked by trained specialists. But the very fact, as well as the scale of theft, raise doubts about the need to store cryptocurrency "in the clouds."

In August 2016, the Bitfinex exchange was attacked by a hacker, and the attackers managed to withdraw more than 119 thousand Bitcoins.

Bitcoins steal programs

 It is not only hackers who are hunting for expensive coins, who are racking their brains over how to hack a Bitcoin wallet and appropriate other peoples money. To date, programs have been developed that are launched by fraudsters on certain resources. For example, recently there was information about the activation of rogue programs that are sold in the Apple Store under the guise of trusted applications. Bitcoin companies offered their help to the "apple" giant and for some time the store was cleared of low-quality software. However, after a short period of time, virtual fraudsters resumed their attacks. Therefore, Apple representatives suggest that users carefully read reviews before downloading software.

It is quite obvious that hacking a Bitcoin wallet is a serious problem for the global community and each user in particular. For this reason, in the early stages of your work, you must at least familiarize yourself with the basic rules of network security.

Forgotten but still relevant typesquatting

 There are frequent cases of theft of Bitcoins from ordinary wallet owners. For this, beatsquatting is used, when attackers receive money as a result of a technical failure of equipment. But most often a passive attack is used, calculated on the users inattention. Since it is very difficult to hack a Bitcoin wallet using software, scammers use one of the simplest methods, namely typesquatting, when a clone of the original site is created. In fact, the user pays on his own to the account of cybercriminals.
What security mechanisms should be used to keep the wallet safe?

Many stock exchanges and investment funds have already become targets of successful hacker attacks. Therefore, the choice of a virtual wallet must be approached especially carefully.

Use multiple cryptocurrency storage locations

Users who often pay with cryptocurrency can minimize the chances of a Bitcoin wallet being hacked by keeping fixed assets in a safe place. It is recommended to use mobile gadgets for small payments. Also, dont forget about two-factor protection.

When using a wallet installed on a computer, you must make a copy of it. Please note that if the device fails, without duplicate information, all Bitcoins will be irretrievably lost.

Every cryptocurrency user knows what a Bitcoin wallet is, but many forget about the need to update copies regularly. Thus, all addresses that were created recently will be included in the duplicate wallet. All backups, including those that are not connected to the network, must be encrypted. It is recommended to use complex passwords longer than 16 characters. There are special programs for their generation. An important part of the security of a wallet is the need to always remember your password. In most cases, it cannot be restored.

Despite all the risks, you can keep your virtual wallet secure. A competent choice of storage location, as well as a lot of signatures in combination with other security standards will not allow you to hack your Bitcoin wallet and steal the most expensive cryptocurrency.