Bitcoin Security: How to Securely Store Your BTC
In this article:
Bitcoin gives you complete control over your money, but that also means you’re the one responsible for keeping your funds safe.
As bitcoin’s value continues to rise over time, even small holdings could become significant over time, which makes secure storage more important than ever.
Read on to learn everything you need to know about bitcoin security and how to securely store your coins to make sure no one else can gain unwanted access to them.
Bitcoin Is Secure, But That Doesn’t Mean Your Coins Are!
The Bitcoin network is the most robust and secure peer-to-peer payment network in the world, with a 100% uptime in over a decade.
Bitcoin’s decentralized infrastructure helps to achieve this as it consists of three key pillars: miners, responsible for finding new blocks and confirming transactions; node operators, who validate transactions and ensure that everyone plays according to the network rules; and the actual users.
This setup ensures that no one can change the network rules on a whim, while the chances of someone taking over the Bitcoin network, for example, by controlling more than 51% of its hashrate, or computational power, are extremely low.
However, while the miners and node operators help secure the network as a whole, you need to take extra steps to make sure only you can access your bitcoin and that your bitcoin security setup is robust enough to protect you from other risks of losing the funds.
How to Securely Store Your BTC Using Self-Custody
Secure storage of your BTC begins with a self-custody wallet, meaning that you’re the sole owner of your Bitcoin wallet’s private keys needed to gain access and use your coins.
While it might be more convenient for some, trusting a third party with storing your bitcoin comes with a risk, as the failure of the FTX exchange and hacks of Bitfinex and Mt. Gox exchanges have shown.
However, when it comes to self-custody wallets, be aware that just because a wallet claims to be self-custodial doesn’t mean you should use it. It all depends on your needs and the sum you want to secure.
For example, self-custodial software wallets, including mobile apps, are still connected to the Internet, which opens the possibility of theft. While this type of wallet can be great for storing small sums of BTC, for a more secure setup that is more appropriate for larger sums, you would need to use a hardware wallet device for storing your bitcoin private keys and signing transactions.
On that hardware, you store the private keys offline and use its app or another compatible mobile or browser-based wallet to transact. Moreover, you can pick an air-gapped wallet, which is even more secure.
However, there are still multiple attack vectors and risks you should be aware of, as well as measures that help mitigate them and store your BTC more securely.
5 Best Practices to Enhance Your Bitcoin Security
While the list of practices to securely store your bitcoin could be much longer, especially when you can consult with experts, such as The Bitcoin Way, here are five Bitcoin wallet security measures that’ll help secure your funds better.
- Use a bitcoin-only hardware wallet: By using a bitcoin-only hardware wallet, you substantially decrease the number of potential attack vectors due to potential code exploits. The more cryptocurrencies a wallet supports, the more risks it introduces. Also, consider looking into air-gapped hardware wallets and extra security layers such as a passphrase or multisig setups.
- Secure your seed phrase: The seed phrase, the crucial lifeline to your wallet, needs to be secured and backed up completely offline so your bitcoin is protected from hacks and accidental loss. For better security, follow the 3-2-1 rule, which means you need to have three copies of your seed phrase, stored on two different types of media, such as paper and metal, while one copy should be stored off-site.
- Take care of your personal cybersecurity: Implement the best practices that help increase your cybersecurity, such as antivirus programs, and stay vigilant on the Internet. Criminals are using multiple tactics to deceive their victims and steal their funds, such as sharing malicious links.
- Protect your privacy: By strengthening your privacy, you’re decreasing the risk that criminals might target you, as they won’t know you hold BTC at all or they wouldn’t be able to figure out how much bitcoin you have. One of the instruments that will not only help you improve the privacy of your bitcoin holdings but will also ensure you can spend your BTC in the future is smart UTXO management. Also, running a Bitcoin node will help improve your privacy even further while making you less dependent on third parties broadcasting your transactions.
- Prepare your BTC inheritance setup: This is especially crucial if you’re saving bitcoin to transfer it to the next generation. You can have the best setup to store your BTC, but it won’t help if you don’t have a plan how your relatives or children will be able to access your bitcoin if something happens to you.
Advanced Bitcoin Security Considerations
Next to using a self-custodial wallet setup, there are additional security considerations you have to be aware of, as the world keeps advancing, potentially introducing new attack vectors.
Quantum Computing and Bitcoin Security
Quantum computing is often cited as a potential danger and security risk to Bitcoin.
There are many technical aspects to this, but the main issue is the potential danger of quantum computers breaking the Elliptic Curve Digital Signature Algorithm (ECDSA), a cryptographic algorithm used by Bitcoin to ensure that only you can access your BTC.
While this threat is still potentially many years away, you need to be aware of trends in this technology and solutions that are now being developed by bitcoiners to create a quantum-resistant Bitcoin. By being on top of these trends you’ll be able to implement new solutions in time and protect your BTC.
Network-Level Security
While the Bitcoin network is the most secure cryptocurrency network, following news and trends in this ecosystem is a good idea. The decentralization of this network is not static and there are multiple parties that might attempt to change the Bitcoin protocol or affect the network in other ways.
For example, the Bitcoin community is closely following the activities of mining pools and whether they can get enough hashrate to try to attack the network. However, this is very unlikely, as the pools would hurt themselves in the process.
In either case, as bitcoiners prefer to verify things rather than trust them blindly, they keep an eye on all theoretical threats as well. Among them are also potential regulatory restrictions that would make the functioning of the Bitcoin ecosystem and using BTC more difficult. However, recent positive developments on the global regulatory front make this type of attack less likely, but it couldn’t be ruled out, especially when it comes to protecting the privacy of BTC users.
Learn How to Secure Your Coins With The Bitcoin Way
Properly storing your bitcoin and protecting it from all kinds of threats and risks might feel like a challenging task, especially as new risks emerge. Therefore, it helps to be aware of the long list of potential attack vectors and ways to protect your funds. Moreover, the larger your bitcoin portfolio, the higher the stakes are.
After all, it’s your money and you’re responsible for it.
This is where we can help. Our team has an extensive experience in bitcoin self-custody and personal cybersecurity. If you are looking for a more hands-on approach and to improve your bitcoin security setup, book an appointment with experts from The Bitcoin Way, and we’ll help you find a solution that works best for you.
Take control of your Bitcoin security—book a free 30-minute consultation with our experts today!
FAQs
What is the safest way to store bitcoin?
The safest way to store bitcoin, avoiding third-party-related risks, begins with storing your funds in a hardware wallet, that stores your private keys, also protecting it from online threats. However, this is only the beginning, as you’ll also need to take extra steps, such as securing your seed phrase and implementing other measures, securing your funds even further.
How do I secure my BTC?
Depending on the sum you want to store and other personal preferences, you can secure your BTC by storing its private keys in a non-custodial wallet. This wallet can be a mobile, browser-based, or hardware wallet. Make sure to secure your seed phrase as well.
Where is the best place to hold your bitcoin?
The best place to hold your bitcoin depends on your needs and abilities. For smaller sums and daily usage, you can look for any type of open-source, non-custodial Bitcoin wallet. For larger sums, the best option is to choose a hardware wallet (ideally an airgapped one) and create a secure setup that would protect you from various threats and risks of losing your coins.