Bitcoin Self Custody: Tips for Keeping Your Private Keys Safe & Secure
Bitcoin self custody has become increasingly popular among investors and traders as it provides greater control and privacy over their cryptocurrency holdings.
However, with greater control comes a greater responsibility to safeguard private keys that grant access to those holdings. Losing or exposing those keys can result in the permanent loss of funds. Therefore, bitcoin holders must educate themselves on keeping their private keys safe and secure.
How To Keep The Private Key Safe And Secure?
Whether you are a new or experienced bitcoin investor, this guide will help protect your assets and ensure you remain in control of your funds.
1. Store Your Private Keys Offline
Taking additional precautions is essential to ensure your private keys’ safety when using offline storage methods. For example, you should always make multiple backups of your private keys and store them in separate, secure locations.
If one backup is lost or compromised, you can still access your funds using another backup. According to a report, 20 percent of total Bitcoins in the world are parked in lost or stranded wallets because the owners forgot passwords.
Another important consideration is to keep your private keys completely confidential. Never share your private keys with anyone, including family members or trusted advisors. Additionally, avoid writing them down on electronic devices or cloud storage platforms, as these can be vulnerable to hacking or theft.
Overall, while offline storage methods can provide security and peace of mind for bitcoin investors, they require additional effort and diligence. By following best practices and keeping your private keys offline and secure, you can minimize the risk of losing your funds and enjoy greater control over your bitcoin holdings.
2. Use a Hardware Wallet
A hardware wallet is one of the most secure ways to store your private keys offline. These physical devices are designed for Bitcoin self-custody and protect your private keys. They are often considered one of the safest ways to store cryptocurrency assets.
You can also use platforms like Casa, which protect your bitcoin with multiple keys. These are stored in separate places for extra security. The platform protects your assets and provides access even if one of your keys is stolen or lost.
Hardware wallets, including USB sticks and small handheld devices, come in different forms. They are usually password-protected and come with a recovery seed phrase that can be used to restore your wallet in case of loss or theft.
According to Market Watch, the global hardware cryptocurrency wallet market size was estimated to be near about $214.24 million in 2021. And it is expected to reach $1665.23 million by 2028. One of the main advantages of using a hardware wallet is that it keeps your private keys offline, which makes it much harder for hackers or malware to access them.
You connect your hardware wallet to your computer and enter your password when transacting. It ensures that your private keys are never exposed to the internet and provides security to your bitcoin holdings.
3. Backup Your Wallet Seed And Private Keys On Paper
Backing up your wallet seed and private keys on paper is essential to securing your bitcoin holdings. It involves writing down your seed phrase and private keys on a piece of paper and storing them in a secure location. It ensures you can still access your funds if your hardware wallet or other storage device is lost, damaged, or stolen.
To create a paper backup, you should first make sure that you have your seed phrase and private keys written down in a safe and secure location. You can then create multiple copies of this backup and store them in different locations, such as a safe deposit box or a fireproof safe.
It is essential to ensure that your paper backups are stored securely and protected from threats like fire, water damage, or theft. Consider using a waterproof and fireproof storage container or storing your backups in multiple secure locations to ensure you can still access your funds if one backup is lost or compromised.
4. Use a Password Manager to Generate Hard-To-Crack Passwords
Using a password manager to generate hard-to-crack passwords is an intelligent way to secure your bitcoin holdings. A password manager software program helps you create, store, and manage complex passwords for online accounts.
These programs typically use advanced encryption techniques to keep your passwords safe and secure. However, 65% of users don’t trust password managers, despite 60% of them falling prey to a data breach.
One of the most significant advantages of using a password manager is that it can generate strong, unique passwords that are difficult for hackers to crack. Password managers can create long, complex passwords that include a mix of letters, numbers, and symbols. It makes it much harder for hackers to guess or brute-force your password and can provide additional security to your bitcoin holdings.
When using a password manager, it is essential to choose a strong master password that is easy for you to remember but difficult for others to guess. You should also ensure that your password manager is protected by multi-factor authentication and is regularly updated to ensure that it is secure and up-to-date.
5. Don’t Leave Your Bitcoins In Exchange For Longer Than You Need To
Leaving your bitcoins in exchange for longer than needed can be risky, as exchanges are vulnerable to hacking and other security threats. While exchanges often provide secure storage options for their users, they are still central points of failure that hackers can target or suffer from security breaches.
To minimize the risk of losing your bitcoins to an exchange hack or security breach, it is recommended that you only keep the number of bitcoins that you need for trading or other purposes on the exchange. Any excess funds should be transferred to a more secure storage option, such as a hardware wallet or offline storage.
It is important to note that transferring your bitcoins to a different storage option may incur fees and take time to process. So, plan accordingly and ensure you have enough time and resources to complete the transfer. Additionally, you should ensure that you are familiar with the transfer process and clearly understand the risks and benefits of different storage options before making any decisions.
Conclusion
Securing your private keys and protecting your bitcoin holdings requires a combination of different strategies and best practices. While each strategy has advantages and challenges, following these best practices can help reduce the risk of unauthorized access, theft, or loss of your bitcoin holdings.
It is essential to stay vigilant and keep up-to-date with the latest security threats and emerging technologies, as the landscape of cryptocurrency security is constantly evolving. By taking the necessary steps to secure your private keys and protect your bitcoin holdings, you can enjoy greater peace of mind and maintain greater control over your financial future.
Read Also:
- 5 Reasons to HODL Bitcoin in 2021
- Why Should You Find Bitcoin ATM Locations Near You?
- Bitcoin Locations: How to Find Places that Accept Cryptocurrency
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