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How to setup and secure your bitcoins?


Nov 06, 2017 Posted /  9099 Views


How to setup and secure your bitcoins?

Storing bitcoin in a secure and protected method is very important after all it is matter of safeguarding bitcoin from eyes of hackers and attackers who can steal your bitcoins. It is not necessary that only hacking can be the reason to lose your bitcoins, but if you forget the private key then it can cause you a heavy loss. There are many companies which provide wallet services which you can use to secure your bitcoin private keys, which vary in different types for different devices. When it comes to fiat currencies, we store them in banks or physical wallets, but how do one store bitcoin? The idea to store your bitcoins securely is to not share the private keys with anyone, so it is better to opt for cold storage wallets rather than going for online or web based wallets. Below are some cold storage methods and types of wallets to store bitcoins securely:

1.  USB drive or storage media

You can store Bitcoins on removable media, including USB flash drives and CD-R's. These can then be kept in drawers, safes, safe deposit boxes, etc.
Storing Bitcoins on removable media is done by saving a copy of the wallet.dat file, and then removing it from the computer. This should be done with the Bitcoin software completely shut down. Because removable media can fail, it is advisable to keep any significant balance on two different pieces of media (e.g. two different USB flash drives).

Pro:

1. When Bitcoins are saved on removable media and completely removed from online computers, and no one has a copy of the file, the risk that they can be stolen is eliminated.

 

2. Relatively simple for majority of computer users.

Con:

1. Requires use of the Bitcoin client, with its associated drawbacks (hours/days to download blockchain, etc.)


2. Not user friendly for average non-technical computer users. The location of the wallet.dat file is in a folder that is normally hidden to Windows users, and restoring it requires a command line option that is difficult for novices to figure out.
 

Important: If a wallet is restored from removable media and then is partially spent, it is important to take a new backup. This is because some of the unspent portion is sent to a newly generated "change" address, whose private key under some rare circumstances might be a newly generated one, not present in the original backup. If a new backup is not taken and the wallet.dat containing that new key is later lost, part or all of the unspent balance can be lost with it.

2. Paper wallet

Bitcoins can be stored on paper wallets or Bitcoin bank cards - which essentially the same thing, just made out of different materials. A paper wallet is a sheet of paper upon which private keys and Bitcoin addresses have been printed. You give out the Bitcoin addresses and receive bitcoins. A bank card is a pre-printed card with a single Bitcoin address and private key which is often provided with a separate carrying card that only has the Bitcoin address.

In order to spend the bitcoins, the private key must be imported into a Bitcoin client or entered into a website that accepts deposits via private keys.
You can create your own paper wallets with open-source software, see the paper wallets article for details. Engraved metal bank cards can be obtained from BitBills. Pre-made paper wallets by Casascius can be obtained at the same online store as Casascius physical bitcoins.

Pro:

1. Very secure. If a paper wallet is created securely, the bitcoins cannot be remotely stolen or hacked.


Con:

1. No easy way yet for novices or average computer users to import the keys. Users must manipulate their wallet file with pywallet or use a copy of the Bitcoin software with a special patch applied. No web sites are known to accept Bitcoin private keys yet.
2. If you acquire a paper wallet or bank card from a third party, they will have had access to the private key. Ensure you trust or have recourse against the manufacturer.

3. Offline bitcoin hardware wallet

 

A hardware wallet is a special type of bitcoin wallet which stores the user's private keys in a secure hardware device.
They have major advantages over standard software wallets:
private keys are often stored in a protected area of a microcontroller, and cannot be transferred out of the device in plaintext
immune to computer viruses that steal from software wallets
can be used securely and interactively, as opposed to a paper wallet which must be imported to software at some point
much of the time, the software is open source, allowing a user to validate the entire operation of the device
This page is an attempt to summarize all the known developments of hardware wallets that can use Bitcoin as part of their operation.

 

Now after you have successfully stored your valuable bitcoin, how will you use it?

Let's have a look on some of the things which you can do with Bitcoins:

 

1. Invest

Since there are only 21 million bitcoins that will ever be created, each bitcoin should rise in value over time as long as more and more people continue to use them. To be a bitcoin investor, simply hold your bitcoin and wait.

 

2. Buy stuff by finding merchants who accept Bitcoin

Many online stores (such as Overstock.com, Expedia, Dell, and many others) accept bitcoin in the same way they accept credit cards. Depending on where you live you may also have a store near you that accepts bitcoin.


3. Convert your Bitcoin into gift cards

One easy way to use Bitcoin is to purchase online gift cards from various vendors. Many big companies, including Amazon and Sears, offer gift cards via Gyft, an online marketplace that supports Bitcoin.


4. Donate it

Many charities including Wikipedia accept bitcoin.


5. Give some away

One of the joys of bitcoin is giving some to a friend and teaching them how to use it. Now that you have successfully moved bitcoin to your own wallet, you are a bitcoin expert! Grab your friends phone, install a wallet for them and send them a tiny amount of bitcoin to get them started.


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Tags: bitcoin Accept bitcoin storage media Paper wallet hardware wallet

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