Bitcoin Safety Guide

If you haven’t paid for an online transaction in bitcoins yet, chances are you probably will before long. The digital currency that was invented in 2008 has been widely adopted for online transactions in the last couple of years by more mainstream users and its popularity is spreading quickly.

But the legitimacy of this potentially revolutionary currency is heavily tied to its safety — and lately that safety has been breached, time and again. It’s hardly shocking: As the major pieces of our daily lives — our personal information, our financial data and, indeed, our money itself — moves online, criminals have turned their attention to cyber crime. So imagine, then, that with all of this money on the Internet being stored in our computers or, as some users choose to do, in private online banks, that this is very tempting to these cyber thieves.

So how do you keep your bitcoins safe? First, don’t keep them all in online banks or stock exchange services. These are newer institutions run by anonymous entities, so you have no guarantee of getting your money back if they are robbed. Even if you consider a place that has a supposedly sterling reputation, again, there are more ways to breach a digital bank than a physical bank vault. Storing small amounts for current operations is OK though.

Use an offline bitcoin wallet service like Electrum or Armory that let you store your bitcoins in heavily encrypted cases on your own hard drive. Use a strong password with these. In fact, don’t use a password you create — use an open-source password-generating software. For the ultimate security, keep this offline wallet in a separate hard drive or a computer that isn’t connected to the Internet, only transferring bitcoins to your Internet-connected device when you need to complete an online transaction.