Bitcoin Security

Computer security should be taken very seriously as you could lose your bitcoins if you neglect it. You do not want to be scammed or losing a lot of bitcoins. Security measures that should be taken depend on the type of bitcoin wallet you are using.  There are four major types of bitcoin wallets:  offline wallets,  desktop wallets, web wallets and mobile wallets.

Offline wallets

Also known as paper wallet. These wallets are not connected to the internet, and for this reason have a larger degree of security. However, you could still lose them (physically) or damage them accidently. A user could spill coffee on the paper; For this reason some users have laminated them.

¨90% of my bitcoins are stored in a paper wallet. I laminated it just in case something happened. I also have multiple copies¨

It is important not to show these keys to anyone, as these keys control the bitcoins.

Desktop wallets

These wallets are applications in the users computer.  A common mistake is downloading a not official wallet (e.g. spyware),  to get the official list of desktop wallets visit https://bitcoin.org  and not having a backup. In case your hard drive crashes you want to have backup of your bitcoin wallet. Additionally, desktop wallets are prone to computer viruses and malware. Indeed, saving your bitcoins in your desktop wallet could pose many risks. We have these tips that may be useful for you:

• Use an official bitcoin wallet
• Always backup your wallet on external drives
• Export your private keys
• Encrypt your wallet (but dont forget your encryption keys!)
• Use multiple wallets (optionally)
• Use anti-virus and firewall software
• Do not install software from untrusted sources (should be obvious)
• Do not keep all bitcoins in one machine
• Validate that you have the right bitcoin wallet (see the article on GPG verification)

¨Add 50 BTC to the list of known lost bitcoins. It was the first block I ever mined, ca 2010, and I didn’t think it was worth saving before I reformatted my pc’s hard drive.¨

Web wallets (or exchanges)

Web wallets pose several risks. When using an web wallet you lose the control over your bitcoins.  While the bitcoin network does not rely on a centralized third party, a web wallet reintroduces the need to trust a third party with your money. In other words, the security of your wallet not only depends on you but also on a trusted third party. One of the big risks is the third party disappearing. This has happened with the once large bitcoin exchange Mt. Gox. and several other sites.   Chances are you get ¨goxxed¨.  Another risk is the site being hacked;  Thus, we do not recommend that you keep large amounts of Bitcoin (BTC) in a web wallet.  However, there are still some things you can do to be more secure:

• Use an official bitcoin wallet
• Do not use a proxy to connect to your wallet
• Always use HTTPS
• Have a secure password (64 byte key)
• Use two factor authentication

Mobile wallets

Mobile wallets execute on your mobile phone. Thus, these have threats both from the internet and physical threats (theft). The main threats for a mobile phone are spyware, malware. We do not have any security tips for mobile phones, except to keep small amounts in them, if any.

• Use an official bitcoin wallet
• Do not install unknown apps

Other tips?

If you have any tips, post them in the comment section.