Did you buy bitcoin at an exchange and you left it in that account?

Find out how to protect your bitcoin by following few simple steps!

There is a big difference between holding bitcoin and any currency on a traditional bank account.

The owner of a traditional bank account does not need to worry to much about loosing the password. If that happens, it can be easily reset from remote or he or she can go to the actual bank with an ID card and in few minutes will be able to access the account again. However, the money are not completely safe as several risks persists as, for example, the bank can go bankrupt, the account can be frozen for many reasons, the authority can seize the account or even take part of them in case of economical crisis and more.

The owner of bitcoin that controls the private keys is the only person that can initiate a transaction. For this reason bitcoin is considered an “unseizable” asset, as no one can access an account without its private keys. This unique peculiarity comes however with a much greater responsibility for the bitcoin owner, because if the private keys got lost there would be no way to retrieve them and access the funds again.

How to safely store bitcoin and other cryptocurrencies?

It is super important to take the right steps in order to create the private keys of a bitcoin account and make sure to store them in a safe way.

It’s never a good idea to leave bitcoin in the account of the exchange as they are vulnerable to possible attacks by hackers as it happened several times in the past (the most famous one was the one to Mt. Gox exchange in 2014, in addition  to all the risks typical of a banking account (risk of bankruptcy, frozen account, seizing or withdrawal by authority).

Once you have purchased your bitcoin, it is fundamental to move them to an account of which you control the private keys. There are basically 3 ways to do so:

• paper wallet: a simple piece of paper where you write the private and public keys;
• software wallet: a software that can be installed on your computer or phone and it will hold your private keys;
• hardware wallet: a specific device that looks like a pen drive that will control your private keys storing them off-line.

The paper wallet faces many limits with regards to the easy of use and it is also subject to irremediable mistakes when manually copying down the private keys. Even if it might seem the easiest way, it is actually recommended only for very expert users as it also causes issues whit the change when spending the funds and there is a high risk of not being able to recover them.

The software wallet is very practical but if the device used gets compromised by a third party, it would be easy to take out all the funds, therefore it is not considered the safest way of storing bitcoin.

The hardware wallet achieve by far the best compromise between security and easy of use. It can be protected by an additional password and it makes it possible to always retrieve the account in case of losing the actual device thanks to a so called “seed” or “ recovery phrase”: 12 or 24 common English words generated according to the BIP39 standard. It is then crucial to make cure that the recovery phrase is safely stored in more than one location and that there are other people that know about them in case it would be needed to access the account.

Which hardware wallet to buy?

There are several companies producing hardware wallets. The two most famous ones are Ledger and Trezor. They offer several models, from the base model to more complex ones, that allow to store a larger number of cryptocurrencies and even display NFTs. In order to detain the private keys of your bitcoin, the base model is more than enough.