The rise in popularity of Bitcoin in recent years has piqued the interest of many people who want to understand more about this new digital asset. What are the benefits of adopting cryptocurrency, one of the most frequently asked questions among this expanding number of new investors? Why are they so popular, for example? This post will attempt to address the first question and outline some of the most significant benefits of Bitcoin use.
Nobody anticipated the quick and overwhelming growth that this new cryptocurrency has achieved during its early days of development and operation. Neither the public’s acceptance nor the great expectation that it would engender. For many, the frenzy sparked by Bitcoin’s entry into the financial markets is analogous to the historic gold rush of the nineteenth century, but with the instruments and digital technology of the twenty-first. In reality, mining is also the source of this cryptocurrency.
Suppose you want to invest with the chance of success in cryptocurrencies. In that case, you must first understand what cryptocurrencies are and the risks and benefits of operating in the digital market. Many entrepreneurs got enticed to invest in crypto-assets and transact using Bitcoin rather than money because of advantages such as decentralization, cheap costs, operational confidentiality, and transaction speed.
Before discussing the benefits of adopting Bitcoin in finance, we must first understand these new assets. Bitcoin is, without a doubt, a completely decentralized and intangible new form of payment that is capable of performing as a viable alternative to the use of fiat money or traditional money. It means it may perform the same duties as traditional money but represent encrypted virtual currencies utilizing digital security.
We must abandon the concept of real money to work with Bitcoin. Because, as previously said, they do not manifest on conventional paper or cards. Bitcoins are held and protected in Bitcoin wallets, which are virtual safes. They are made possible by the blockchain, or chain of blocks, dubbed the most advanced and secure digital technology to date. And only the owner of the cryptocurrencies has access to these wallets because a unique key protects them.
The establishment of cryptocurrencies is to rectify some issues plaguing the financial sector for a long time. The first and most well-known cryptocurrency is Bitcoin. Satoshi Nakamoto, a developer who goes by the pseudonym Satoshi, first released it on the market in 2009. Its creation allows electronic money to be transferred directly from one person to another without requiring a central authority to verify the transaction.
It also simplifies various financial activities by removing the existing bureaucracy, which has caused many transactions to be delayed unnecessarily due to its lengthy procedures. Additionally, its design facilitates lowering the costs and duration of international transactions because using the standard banking method results in long processes that create substantial expenses, in some cases exceeding the value of the transfer. Aside from sluggish money transfers and delays in payments from suppliers and debtors, the traditional money system is often affected by market depreciation which is not a significant factor in the case of Bitcoin.
As the use of Bitcoin grows in popularity, let us take a look at the benefits it provides:
Depending on the algorithm, the majority of cryptocurrencies are decentralized. And this means they are not governed by or under the authority of any government, banking, or financial institution, and all users have the same rights and are on an equal footing. No one, not even developers, can alter the algorithm of a network like Bitcoin. Investors will feel more secure as a result of this. And they can enjoy the insurance to the insecurity that traditional financial institutes may not be able to provide.
Without the involvement of central control authority, transactions in cryptocurrency systems follow a peer-to-peer pattern. That is, without the use of a middleman in your trades. It allows for lower network maintenance expenses, which in turn lowers transfer costs. Unlike banks and electronic payment systems, users can determine the commission size individually and even submit transactions without it.
The excellent processing speed of cryptocurrency transactions distinguishes them. In general, there is almost immediate effectiveness. One of the original objectives of Bitcoin’s inception was to speed up the time-consuming operations of banking transactions. In addition, once a trade is added to the blockchain, it becomes irreversible. Furthermore, transactions’ irreversibility helps prevent record falsification and system fraud, reducing the risk of scams. Similarly, users will not suffer the common transaction issues like incompleteness, reversed action, or unnecessary charges.
One of the primary benefits of cryptocurrencies is their anonymity. You do not need to disclose any personal information to utilize the system, which allows you to remain anonymous and hide your charges. In other words, unless the user explicitly declares their identity, the amounts or terms of their transactions can get revealed to neither financial institutions nor marketing companies. Even the person with whom you made the transaction cannot know your identity, the amounts, or the terms of the operation.
The only way to access the bitcoins in the wallet is to provide a private key that only the owner has. It means that no one can remove coins from an account or stop them from moving. You can use cryptocurrencies to safeguard your assets. The funds in a bitcoin wallet belong to the user alone and serve as financial insurance.
When paying for goods and services using credit or debit cards or other methods, the buyer’s personal information is constantly at risk of being intercepted at the point of payment or stolen from the seller and used against you or the seller to steal your money. Because no personal data gets passed to the seller in bitcoin transactions, you can rest assured that your information will stay in your possession and not fall into the hands of strangers. The level of encryption provided is military-grade and impregnable for cybercriminals.
Bitcoin has a clever system for preventing inflation. For example, in the Bitcoin network, inflation is contained thanks to features such as the limited edition of 21 million mineable coins that no user can change. Also, new coins are released once every 10 minutes, and the issuance of coins is cut in half every day for four years. Similar methods exist in each cryptocurrency network, allowing you to anticipate how many coins are available in a given period in advance.
Many people wrongly believe that cryptocurrencies such as Bitcoin are too challenging to understand and utilize; however, this is not true. Anyone may start using cryptocurrencies, even if they do not have any technical skills or understanding of the system. However, you should be aware that they are not without some degree of associated risks.
You will need to create a Bitcoin wallet, purchase some coins, and have an internet connection to get started. Bitcoin is open and accessible to everyone, especially those who live in underserved areas with limited access to other financial services. However, some threats put the coin’s data in their wallets and transactions at risk. Adding to this the popularity of bitcoins, we will see how to protect them.
Over time, we have witnessed numerous threats that put at risk both the security of data in virtual warehouses and those in transmission during the development of commercial transactions. In this context, we will see some tips to protect our virtual wallets by adding the importance of cryptocurrencies such as bitcoins today.
It is fair to say that Bitcoin has been the virtual currency transaction protocol that has most managed to stand out and gain a foothold in popular economic jargon. Since its creation, this system has demonstrated both advantages and disadvantages in terms of security, which have been the subject of heated disputes following major Bitcoin hacks.
The theft carried out on the Bitstamp exchange bank is one of the most recent. In this case, cryptocurrency cybercriminals took 19,000 BTC after the bank’s virtual wallets were compromised. As a result, the comparable monetary loss in US currency was a whopping 5 million dollars.
Pony Loader 2.0, a Trojan capable of locating and stealing resident wallets on infected PCs, is another serious threat. This time, it is not limited to Bitcoin theft but includes other currencies associated with different protocols.
But what are the factors that promote the repeated appearance of these events, jeopardizing the security of Bitcoin?
Therefore, it is necessary to take extra precautions to strengthen privacy, such as masking the machine’s IP address using a tool such as Tor.
Bitcoin storage portfolios, also called Bitcoin wallets, act as bank accounts for bitcoin and record transactions. Each cryptocurrency in the market has its wallet, and it is not possible to send a coin to a wallet that does not correspond to it. If that happened, you would lose the funds. For example, you must not send ether to a Bitcoin wallet.
Each wallet is different and has its characteristics, but it is difficult to make a “global review” that will cut across as each wallet has its features. Therefore, it is advisable to learn generally about wallets and the different types that exist.
It is wrong to say that we are storing our Bitcoin in a Bitcoin wallet when we simply add a line in a ledger. Cryptocurrencies never leave the blockchain. They merely get assigned to different wallets depending on the transactions made. Thus, sending cryptocurrencies to a wallet not yet generated or not connected to the Internet is possible.
A portfolio comprises of at least two elements:
Most wallets have this public address or private key format, but some wallets may add other identifying elements.
Beware of scammers. Many of them ask for private keys. Strife not to fall victim to their trickery and know that you should never give your private key to anyone under any circumstances. Any person, site, or software that claims otherwise is lying to you, without exception, and just looking to get your money’s worth. If you ever give out your private key, just about anyone will understand your wallet, and your funds may be moved (and it may not be possible to retrieve them).
We can consider three types of wallets :
In the rest of this guide, we will go over these three wallets and look at each advantage and disadvantage.
Online wallets are the easiest to use. They are accessible everywhere and at all times. And they take care of the management of your cryptocurrencies is carried out by a trusted third party. It can be an exchange like Binance or a specialized platform like Blockchain.info, for example.
The exchange offers the advantage of allowing a very high reactivity regarding the purchase or sale of cryptocurrencies. If your tokens or cryptocurrencies are in an external wallet (which would not be an exchange), you will first have to transfer your funds to exchange before you can resell them. Therefore, you will not be able to sell quickly and impulsively given, and you can waste time transferring your funds.
With platforms acting as wallets, users are not the actual owners of the funds. You will not have private keys, and it will depend on the site where your money belongs. If it were shut down or hacked, there is little it could do because the cryptocurrency universe still lacks regulations and laws on this issue. That is why experts recommend distributing your funds on various platforms and various supports to limit risks.
In addition, we may notice other drawbacks in the use of exchanges. Transfer fees are usually very high to withdraw funds, and it is necessary to respect withdrawal limits (a maximum amount per day). Some platforms may block all withdrawals if you have not disclosed your data (KYC), raising confidentiality problems.
Therefore, these platforms get more recommended for short-term operations and small quantities.
The Office wallet (Desktop Wallet) allows you to store your private key on a device that you own. The wallet then provides interaction with the corresponding blockchain. This system does not require you to provide personal information. Most of the time, you have complete control over the costs of transfers. Here, you are the owner of your cryptocurrencies.
These wallets still have some drawbacks. First, the medium on which your private key gets stored remains vulnerable to cyber-attacks. So, if your computer should get hacked, your secret key may be stolen by the hacker.
These wallets require precautions for their use. For example, if you do not update your Bitcoin wallet in the case of a cryptocurrency fork, you may send the wrong cryptocurrencies to an incorrect blockchain.
We must also distinguish between “heavy” wallets and “light” wallets. The first (heavy) requires downloading the entire blockchain. It can weigh several gigabytes but has the advantage of allowing the integrity of the whole blockchain to be verified. The seconds (light) are generally present on mobile devices, and they only depend on the part of the blockchain to verify their integrity. Then there is the risk of sending funds to the wrong blocks.
We recommend that you promote the use of Desktop Wallets that are open source and recognized by the community. These criteria allow knowing if the software is reliable and if it respects the confidentiality of its users (without misappropriation of data or others).
Cold wallets are not like the previously discussed one because it does not need an Internet connection. It gives the most crucial level of security for a wallet because, without internet connectivity, your account cannot get hacked. There are two types of cold wallets, and they are very different from each other, hardware wallets and paper papers.
Traders or users of Bitcoins can generate the paper wallet offline. Then write your public key and your private key on a medium that you saved. This wallet can receive the corresponding currency without an internet connection, making it the safest way to keep your cryptocurrencies. This type of wallet also has a significant drawback in that users cannot use it for outgoing transfers.
To do this, you need to import your private key into a wallet (desktop, mobile, or web client). And by doing this, you make your private key vulnerable to cyber-attacks since it already indirectly connects to the Internet.
We would have to create a new paper wallet on each transfer to overcome this problem. It could quickly become extremely restrictive.
Hardware wallets are devices in which different private keys are encrypted (at least one per supported crypto-currency). They are regularly compared with digital safes. Unlike the paper wallet, these allow you to carry out regular transactions with total security. It is even possible to use a hardware wallet on a malware-infected computer without getting compromised.
It is essential to keep in mind that storage of your cryptocurrencies cannot occur in the hardware wallet. They get stored in an initial mnemonic phrase which you already provided. So even if your digital safe gets broken, lost, or stolen, you have the option of getting your funds back. You need to import your data to another device to do this.
The main drawback of the hardware wallet is that it requires spending a certain amount of money, unlike all other wallet formats. Also, note that not all cryptocurrencies are compatible with these hardware wallets. This wallet is the safest for cryptocurrency users.
Since its introduction, the value of Bitcoin, the most popular cryptocurrency, has risen steadily. Its price has fluctuated randomly throughout this increase. This volatility attracts both investors and cybercriminals because of its irregular price changes. The number of hacks and heists on cryptocurrency exchanges and Bitcoin wallets has increased dramatically since the beginning of the decade in 2009. For instance, a report stated that the recorded number of cryptocurrency crimes hit a world record $4.3 billion in 2019. And chief among the affected currencies are Ethereum, Bitcoin, and other digital currencies.
Cryptocurrency wallets (also known as digital wallets) and exchange providers pose the most significant risk to your digital coins. Bitcoin wallets do not store your digital currency; instead, they retain a private key that gives you online access to the cryptocurrency exchanges. If someone gets their hands on your private key, they can carry out fraudulent transactions or steal your cryptocurrencies. Cybercriminals deploy sophisticated tactics to hack digital wallets and access private keys to steal or transfer crypto assets without the user’s awareness. Secure your Bitcoin wallet to keep your digital wealth safe from cyber-terrorists.
At a point in time, you must have suspected that someone is watching your internet activities? Especially when you create or disclose your data through your online actions and communications in today’s environment, where you can do nearly anything on the Internet. Unfortunately, cybercriminals can easily steal, delete or alter your credentials and use them fraudulently without your awareness because of these digital traces.
Because digital currencies can only run electronically, cryptocurrency holders and traders are particularly vulnerable to cyber-attacks. And this is why picking a safe and dependable online Bitcoin wallet is so important. Here are a few strategies to avoid thieves’ cunning traps and keep your cryptos safe.
A Bitcoin wallet is a device that stores digital currency such as Bitcoin. It can also refer to a specialized electronic device employed for digital currency storage, transmission, receipt, and tracking. There are a variety of crypto wallets available online, and you must pick one that meets your storage and trading requirements, as well as your budget. The company that provides the digital wallet is also essential to take into account. Get one from a trustworthy and respected provider. Some crypto exchanges offer a free Bitcoin wallet to their customers. It would be best if you did comprehensive research online to get one.
Web wallets are convenient, and you can easily create and use them on your website. It is also convenient to use Bitcoin on any device if it has a connection to the Internet. The problem is that as it is easy to write, it is also risky to use. A web wallet full of bitcoins is mouth-watering prey for hackers. Due to the internet connection, the web wallet Bitcoin will always stay exposed to the risk of being hacked. Even if you cut off the Internet, you can get away from a lot of hacking threats. Download and install an offline bitcoin wallet, put bitcoins in it, and disconnect from the Internet. You can also use an old laptop computer. Bitcoin exchanges use this method of storing bitcoins on devices blocked from the Internet, formally called ‘cold storage.’
Get a two-factor authentication Bitcoin wallet as well (2FA). Additional security for your cash is provided by demanding verification before performing account operations like signing in and withdrawing or sending money. The intelligent software will request your 2FA code if someone attempts to access your wallet without your consent.
Another line of defense against future cyber-attacks is to encrypt your digital wallet. When someone attempts to enter your account, you can establish a password and lock your coins to prevent them from gaining access. The hacker will not be able to steal your Bitcoin unless he knows the password you created for yourself. Even the most obstinate hacker will fruitlessly toil trying to access your account if it is duly encrypted.
Some wallet service providers let you make a backup of the data in your wallet. A backup of your wallet ensures that your data and funds are safe in the event of your computer system or software failure. If your money or data is stolen or misplaced, you can quickly get it back. Use a variety of backup devices to make account recovery a snap. A variety of devices, such as paper or hard drives like USBs and CDs, may be an option for you to investigate.
One of the most excellent ways to keep your crypto coins safe if you have a lot is to use a multisig wallet. To use this feature, you will need the digital signatures of many approved users, which are available in many crypto wallets. Without the consent of these individuals, hackers will be unable to gain unauthorized access to your wallet and steal your crypto funds. Check to see if your Bitcoin wallet has this option enabled, and if not, do so now!
Keep your software up-to-date at all times. You can access the latest features and security patches by updating the software in your wallet. Enabling automatic updates may make users’ lives easier, but receiving notifications of new software updates is still desirable. The software will inform you of the new features, and the installation will not stop you in the middle of a transaction. It is possible to test for an issue that could affect your data before applying the update by waiting a few days.
Make passwords that are long and difficult to guess. No one writes a bank account without using a password. A Bitcoin wallet functions similarly to a bank account used to send and receive directly from one wallet to another. Note that a Bitcoin wallet, of course, requires a password. Make the web service password complicated if it’s a web wallet, and encrypt it if it is an offline wallet.
The more complex and lengthy you make the password, the more secure it is. The ‘random substitution technique,’ which cracks passwords by entering random characters, can solve any password, no matter how complex. To begin, make your password as long as possible. The longer a password is, the more time it takes to crack it. Hackers are more likely to give up if it takes too long to break. Use a password that is at least 8 characters long and as long as possible.
Do not, however, use a password like ‘12345678’ or ‘password.’ It is simple to figure out even before using the randomization technique. When creating a password, make sure to use a combination of letters, numbers, and special characters. ‘passwordispa33w0rd’ is more secure than ‘pa33w0rd,’ and ‘pa33w0rd’ is more secure than ‘password.’ Do not forget the password, though.
Although if you forget your bank account password and go to the bank with your ID, they will tell you the password. However, retrieving the password for your Bitcoin wallet is difficult. It is because no other institution can take over management in the same way that a bank can.
Some Bitcoin wallets send passwords via e-mail after confirming the user’s identity, but this is not true for all services. Users have no choice but to keep their passwords safe in the end. Never divulge your private key to anyone else.
Think of your private key as the PIN to your bank account. Please keep it safe because it is the key to your hard-earned cash. Keeping your private keys offline is one approach to keeping your crypto wallet and cash safe. To minimize deterioration, you can write it down on paper and save it somewhere safe, or you can utilize cold storage devices that are accessible offline.
Cybercriminals frequently use false links to set up their traps. They will do everything they can to capture their target’s attention and persuade them to click on unique links that lead to dangerous websites that can steal personal information and damage computing gadgets. Clicking on a potentially harmful link could jeopardize your Bitcoin wallet, so stay away from unfamiliar links.
Do you enjoy using free WiFi in public places? Hackers, on the other hand, do! Users’ sensitive information is at risk on Free WiFi networks since they are frequently left unprotected. You can use mobile data to connect to password-protected accounts such as bank accounts, online wallets, and business and social networking accounts while you’re out and about. Alternatively, you can use a virtual private network (VPN) to encrypt your connection and disable Bluetooth on your phone to prevent it from connecting to unrecognized devices.
Hackers are always looking for new ways to steal your information. So, follow these best practices to construct the most secure Bitcoin wallet possible. If you have not already, use your wallet’s comprehensive security features to ensure your crypto cash’s safety, reliability, and accessibility.
Possibly, at this moment, you have something in your mind like: “Is it that complicated? Do I have to have all this in my head to have bitcoins? What you do with your bitcoins is entirely up to you and how serious you want to take its security. In some cases, it is possible that the greater the number of bitcoins that you wish to have, the greater the level of protection you will need.
Our recommendation is to start from the simplest. If you are going to store a couple of hundred euros, do not get too complicated: use a lightweight HD wallet on your computer or mobile phone. Make a backup copy of the seed, encrypt it if you wish, and keep it well. Also, protect the wallet with a pin or password.
With this, you have something reasonably safe, as long as you do not have the infected device, and it is a simple process that does not take you more than 3 minutes to complete. As a bonus, if you do not mind spending money, you can use a hardware device to store the keys.
If you store more significant quantities, we recommend creating a cold wallet through a 2 of 3 multi-signature address, for example, with Copay. If the amount to be stored is going to be very large, put two of the encrypted keys and print them on paper in a safe place and separate them from each other. Do not use Copay on the same computer to obtain the three keys. You must use, for example, a tablet, a smartphone, and a computer.
Finally, you should eliminate the wallet of two devices and only leave one in the most comfortable device, for example, the smartphone, to see the balance and even have the address to hand to send funds. Still, you can never operate without one of the two other keys that you can load from time to time in another of the devices.
Remember that money movement in Bitcoin is irreversible. So, if your currency gets stolen, you cannot call any central authority to cancel the transfer and return it to you. Not even Satoshi Nakamoto can do this because Bitcoin advocates animosity. Even the owner’s name we all know is a pseudonym. However, the essential thing prioritized by Bitcoin is transparency; as such, all movements get reflected, and traders can trace them.
If your bitcoins unavoidably get stolen, you should contact the Police, specifically the Logical Security department (or its counterpart in your country), who specializes in these aspects. Note that this is only possible in countries where Bitcoin is legally accepted.
It is indeed a complex and slow task, and in very few cases, the Police have managed to recover the bitcoins. Still, in recent months (and increasingly), international authorities from several dozen countries are already organized to track and resolve this type of case, developing specific tools for blockchain analysis.
Although Bitcoin technology is safe in itself and its online wallets have improved a lot when it comes to security, you will never be 100% secure from the evil arts of hackers, thieves, and friends of others in general. As is often the case, common sense is also a good advisor for protecting your bitcoins.
Of course, the level of paranoia must always tally with the amount of coin handled, and it will depend on each type. Remember that in Bitcoin, your bank is you, you take care of your security, and you can define your protocols.
With these recommendations (you can even combine some), you will significantly limit the room for maneuver for anyone interested in getting your bitcoins.
