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How to safely protect and own your bitcoins?

Security goes hand-in-hand with finding the right type of wallet.

Like in real life, your wallet must be secured. Bitcoin makes it possible to transfer value anywhere in a very easy way and it allows you to be in control of your money. Such great features also come with great security concerns. At the same time, Bitcoin can provide very high levels of security if used correctly. Always remember that with Bitcoin, it is your responsibility to adopt good practices in order to protect your money.

For added security, keep your hardware wallet and its backup key in separate places.

Hardware wallets are the best balance between very high security and ease of use. These are small devices designed at the root to be a wallet and nothing else. No software can be installed on it, which makes them very safe against computer vulnerabilities and online thieves. Because they can be backup, you can recover your funds if you lose the device with your seed words. There are many options on the market, each with certain variations. If you want to use a software wallet, then we suggest that you check out Veriphi’s software wallet analysis.

3 hardware wallets for cold storage

Coldcard

Trezor

Ledger

“Privacy is not something that I'm merely entitled to, it's an absolute prerequisite.”

Bitcoin transactions are irreversible, as no official authority acting as an intermediary is able to reverse them. This is essential when the people involved on both sides of the transaction do not know each other, because only the recipient of the payment can return it in case of error. It also means that each of your movements is permanently recorded on this immutable record. When it comes to securing your bitcoins, it’s also the footprint you leave behind your uses. It is also important to be careful when sharing information about your transactions in public spaces such as the Web, on a voluntary or involuntary basis, in order to avoid revealing your identity with your Bitcoin address.

3 ways to make private transactions

Tor

The Tor browser prevents someone watching your connection from knowing which websites you are visiting. The Tor browser aims to make all users look the same, making it difficult to identify fingerprints based on information from your browser and device. Your traffic is relayed and encrypted three times when it passes over the Tor network. The network is made up of thousands of servers managed by volunteers called Tor relays.

Desktop Wallet

Wasabi is an open source, non-private, privacy-focused Bitcoin wallet for computer, which implements an untrusted coin shuffle with mathematically provable anonymity. The CoinJoin coordinator cannot steal or violate the privacy of participants. Each of the signatures is created on the participants’ computers, so anyone trying to connect the signatures cannot modify the transaction or redirect the funds. The funds will always be in a Bitcoin address that you control.

Mobile Wallet

Thwart blockchain based surveillance and censorship. Circumvent financial surveillance with the most advanced privacy enhancing technologies on the market.Take it anywhere, even offline. Bypass data network restrictions with offline sending. Roll your own offline storage wallet with any spare mobile phone. Be your own Swiss Bank. Fully non custodial software ensures you are always in control of your private keys. No email address, no ID checks, and no hassle. Just install and go.

A few things you should know

Unless your intention is to receive public donations or payments with full transparency, publishing a Bitcoin address on any public space such as a website or social network is not a good idea when it comes to privacy. If you choose to do so, always remember that if you move any funds with this address to one of your other addresses, they will be publicly tainted by the history of your public address. Additionally, you might also want to be careful not to publish information about your transactions and purchases that could allow someone to identify your Bitcoin addresses.

Stored in a safe place, a backup of your wallet can protect you against computer failures and many human mistakes. It can also allow you to recover your wallet after your mobile or computer was stolen if you keep your wallet encrypted.

Single points of failure are bad for security. If your backup is not dependent of a single location, it is less likely that any bad event will prevent you to recover your wallet. You might also want to consider using different medias like USB keys, papers and CDs.

Encrypting your wallet or your smartphone allows you to set a password for anyone trying to withdraw any funds. This helps protect against thieves, though it cannot protect against keylogging hardware or software.

You should make sure you never forget the password or your funds will be permanently lost. Unlike your bank, there are very limited password recovery options with Bitcoin. In fact, you should be able to remember your password even after many years without using it. In doubt, you might want to keep a paper copy of your password in a safe place like a vault.

Because the Bitcoin network is a peer-to-peer network, it is possible to listen for transactions’ relays and log their IP addresses. Full node clients relay all users’ transactions just like their own. This means that finding the source of any particular transaction can be difficult and any Bitcoin node can be mistaken as the source of a transaction when they are not. You might want to consider hiding your computer’s IP address with a tool like Tor so that it cannot be logged.

Bitcoin works with an unprecedented level of transparency that most people are not used to dealing with. All Bitcoin transactions are public, traceable, and permanently stored in the Bitcoin network. Bitcoin addresses are the only information used to define where bitcoins are allocated and where they are sent. These addresses are created privately by each user’s wallets. However, once addresses are used, they become tainted by the history of all transactions they are involved with. Anyone can see the balance and all transactions of any address. Since users usually have to reveal their identity in order to receive services or goods, Bitcoin addresses cannot remain fully anonymous. As the block chain is permanent, it’s important to note that something not traceable currently may become trivial to trace in the future. For these reasons, Bitcoin addresses should only be used once and users must be careful not to disclose their addresses.

To protect your privacy, you should use a new Bitcoin address each time you receive a new payment. Additionally, you can use multiple wallets for different purposes. Doing so allows you to isolate each of your transactions in such a way that it is not possible to associate them all together. People who send you money cannot see what other Bitcoin addresses you own and what you do with them. This is probably the most important advice you should keep in mind.

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