HOW TO KEEP YOUR BITCOIN SAFE

Tools And Tips For Protecting Cryptocurrency Assets

Rooney Edwards
 HOW TO KEEP YOUR BITCOIN SAFE
Tools And Tips For Protecting Cryptocurrency Assets
Printed in the United State of America
© 2021 Rooney Edwards
The publication is protected under the US Copyright Act of 1976 and under applicable international,
federal, state and local laws, and all rights are reserved, including resale rights: you are not allowed to
reproduce, transmit, or sell this book in parts or in full without the written permission of the publisher.
Disclaimer: Please note that much of this publication is based on personal experience and anecdotal
evidence. Although the author has made every reasonable attempt to achieve the accuracy of the
content in this book, they make no representations or warranties with respect to the accuracy or
completeness of the contents of the book and specifically disclaim any implied warranties. Your
particular circumstances may not be suited to some examples illustrated in this book. Nothing in this
book is meant to replace common sense or legal, accounting, or professional advice and is for
information only. Any trademarks, service marks, product name are for reference purpose only. No
endorsement is implied.
 TABLE OF CONTENTS

Table of Contents
Introduction
What is a Cryptocurrency Wallet?
A Summary Of The Various Types Of Cryptocurrency Wallets
Software Wallets
Web Wallets Should Not Be Used
Restrict The Access To Corporate Bitcoin Wallets
Separate Your Bitcoins Into Two Wallets, Hot And Cold
Store Your Private Keys Offline
Consider Using A Dedicated Hardware System
On Both Online And Offline Computers, Use Linux
Securely Back Up Your Data Offsite
Use A Deterministic Type 2 Wallet
Use Fragmented Backups
Make Use of the Hardware Wallet
 INTRODUCTION
Contemporary business remittance methods have certainly been
revolutionized by Bitcoin. Satoshi Nakamoto created this digital currency in
2009 under the pseudonym Satoshi. With Bitcoins, the transaction is often
carried out without the involvement of a middleman, which means there is no
bank and no government involved either.

You will therefore be charged little or no transaction fees and will not be
required to provide any personal information such as your real name.
Although Bitcoin offers many advantages for users, the digital currency also
comes with security flaws, which could cause you to lose your hard-earned
money.
In the present day, you will find that an increasing number of merchants are
beginning to accept Bitcoin payments. The Bitcoin currency can be used to
purchase webhosting, pizza, and even manicure services.
You can make payments using Bitcoins almost instantly. A credit card
doesn’t need to be processed. All transactions are free of hidden fees and
there’s no lengthy verification process.
Furthermore, using Bitcoins to pay for international payments is cheaper
since they are untied from any country and are not regulated by any
government. It is no wonder that small businesses are using Bitcoins in their
business transactions now because there are little or no transaction fees
involved.
Moreover, there are even Bitcoin investors who make money since Bitcoin's
value rises and they sell it later on when it is worth a lot more. However,
there are also some disadvantages to Bitcoin and if there is one major
weakness, it is Bitcoin's security and safety.
Essentially, when you have Bitcoins, you will store them in your personal
Bitcoin wallets. That's why you are your own bank. Should you ever forget
the password to your wallet, your Bitcoins will be gone forever, and there's
no way to open it.
In addition, you might encounter situations where scammers and hackers
would be able to steal your Bitcoins. Some malware viruses will take
whatever Bitcoins you may have on your Bitcoin wallet, and they'll be gone
in seconds. Remember that if you lose your Bitcoins, there's nowhere you can
turn to.
With Bitcoins, you're your own bank and your money's not covered by
insurances, such as it would be when banking the traditional way. But don't
let this scare you, if you're considering joining Bitcoin. I am just trying to
inform you about the importance of Bitcoin security and safety. Yes, security
and safety is very important when dealing with Bitcoin, so here are ten things
you need to consider when it comes to protecting your Bitcoins
Keeping cryptocurrency safe is much more complicated than simply
receiving it.
You will find information in this guide that will help you choose the right
wallet, protect your funds, and avoid the most common crypto security
hazards.
 WHAT IS A CRYPTOCURRENCY WALLET?
Essentially, a cryptocurrency wallet is a software program that stores your
public and private keys, allows you to send and receive digital currencies,
monitor their balance, and interacts with various blockchains. Your
cryptocurrency asset must be stored in a cryptocurrency wallet for it to be
safe.

There are a handful of cryptocurrency wallets out there, but the key
difference is whether they are hot or cold.
Hot Wallet: A hot wallet is connected to the internet and is accessible at any
time.
Cold Wallet: A cold wallet does not have internet access and lets you store
funds offline. It is still possible for you to receive funds at any time, however,
no-one is allowed to transfer them out.
All online cloud wallets, nearly all mobile wallets, most software wallets, and
exchanges make up hot wallets.
There are numerous types of cold storage, including hardware wallets, offline
paper wallets, USB and external storage devices, and physical bearer items
like physical Bitcoins.
Hot wallets are useful for frequent trading, while cold wallets are better for
holding crypto assets for a longer period.
Before we consider various digital wallets, let's take a moment to look at why
storing your digital assets in an exchange is not generally a good idea.
 A SUMMARY OF THE VARIOUS TYPES OF
CRYPTOCURRENCY WALLETS
There are four different types of cryptocurrency wallets: paper, hardware,
cloud, and online. Let’s examine each of them.
Paper Wallets
Paper wallets usually fall into the cold storage category. Generally speaking,
the term “paper wallet” refers to your public and private keys which are kept
in a physical form. The paper wallet offers high levels of security to its users.
Digital keys are sometimes printed from a file or from software. You can
scan the QR code directly from your paper wallet if you do not want to use a
software client.

Software Wallets
You can use a personal computer or a smartphone to download and install
software wallets. Both desktop wallets and mobile wallets offer strong
security, but they cannot protect against hacking and viruses completely, so
you must always ensure that your devices are secure. As a rule, mobile
wallets are more convenient than desktop wallets, even though you can
manage your funds with both. Furthermore, some software wallets let you
access funds simultaneously on multiple devices, including smartphones,
laptops, and hardware wallets.

❖ Exodus
❖ Jaxx
❖ Electrum Wallet
❖ Freewallet
❖ Hardware Wallets
❖ Infino Wallet
In contrast to software wallets, hardware wallets use an external device, such
as a USB, to store your decryption keys. They are completely secure and cold
as well as making online payments. Many hardware wallets can be used with
web interfaces and supported multiple currencies. All you need to do is
simply plug the device into your online device, unlock your wallet, send
money, and confirm a transaction. The most secure way to store crypto assets
is through a hardware wallet. The only problem is that they’re not free to use.
Popular hardware wallets include:

❖ KeepKey
❖ Ledger
❖ Trezor
The most secure way to get a hardware wallet is directly from a
manufacturer. It is dangerous to buy it from strangers, especially when you
don't know them. No matter what hardware wallet you buy, it is very
important that you always initialize it and reset it.
You can usually find information about creating a paper wallet on the
project's website or community page. Using MyEtherWallet now, you can
securely store your Ether and all other ERC-20 tokens in paper wallets. Using
Bitcoin Paper Wallet Generator, you can generate paper wallets for Bitcoin.
A paper wallet is cold but comes with its share of risks as well. For instance,
paper wallets are easy to damage, prone to being burned, and easy to copy.
You also need trust if you aren't making one yourself. Some people make
paper wallets less fragile by laminating them, creating multiple copies and
storing them at different places, engraving them on metal or other durable
materials, etc.
Note that no paper wallet should be kept online. All paper wallets should be
kept offline with the private key kept offline. Keep your paper wallet files
secure by storing them online.
Cloud Wallets
A cloud wallet, by definition, is hot. It allows you to access your funds no
matter where you are or what device you are using. However, they can be
controlled by third-parties and store your private keys in the cloud. Because
of this, cloud wallets are prone to theft and attacks. Popular cloud wallets
include:

❖ Blockchain.info
❖ Coinbase
❖ Guarda
❖ Metamask
Online wallets that aren't custodial are the safest version of cloud wallets.
Products like these are available through web and apps, but your private keys
are kept secure. Cloud wallets that do not encrypt bitcoin transactions are
typically used in exchange platforms, meaning that they can be used for any
kind of digital currency trading. Examples of such wallets include:
❖ Bitwala
❖ LocalCryptos
Typically, your option of wallet depends on your portfolio. Every serious
project should have its own native wallet, accessible through its website.
However, sometimes a multicurrency wallet is more convenient.
Only certain coins are supported by some wallets. The amount of coins you
can store in hardware wallets varies. On the other hand, popular
cryptocurrencies such as Bitcoin and Ethereum offer a great range of wallets.
You must also protect your private recovery seed phrase when you receive a
(hardware) cryptocurrency wallet. The CryptoTag Seed Word Protection
Tool, which is virtually indestructible titanium plates, is one of the most
reliable tools for protecting seed words.
 WEB WALLETS SHOULD NOT BE USED

This type of Bitcoin wallet is also referred to as a hosted wallet because it is

hosted by a third party. Putting your Bitcoin in the hands of another company
is like giving them your precious objects. Some, although easier to use, may
be unable to protect your Bitcoins as fully as you do.
You will need to register for an account after deciding to make use of this
Bitcoin wallet and start depositing your Bitcoins there. Getting Bitcoins on
your account enables you to start purchasing things you want with it and to
even send and receive Bitcoins through the web wallet.
In addition, these web wallets are a magnet for hackers and thereby, they
should be avoided in as many situations as possible. It is highly
recommended to employ the services of a Bitcoin exchange, but if this is not
possible, you should perform a thorough investigation of the company and
choose one that will offer high levels of security. You can read reviews
online from the industry. The web wallet will allow you to transfer your
Bitcoins from your exchange-based wallets to your web wallet from time to
time. Additionally, you can move Bitcoins between your exchange-based
wallets after every exchange transaction.
 RESTRICT THE ACCESS TO CORPORATE
BITCOIN WALLETS

Almost certainly you are running a business, and you have decided to buy
bitcoins as your medium of payment. It is always a good idea to be
conservative with allowing access to your Bitcoin wallets. This is particularly
important in a business setting. The anonymous nature of Bitcoin transactions
makes it difficult to track if ever someone tries to steal your Bitcoins. An
employee who gets access to your Bitcoin wallet can easily move your funds
to another wallet without knowing you. The destination wallet cannot be tied
to any individual employee.
If your organization has multiple employees and staff and some of them need
access to your Bitcoin wallet to make certain transactions, you should use a
wallet that provides multiple sub wallets. Make sure that you assign sub
wallets for every employee that will need access to your Bitcoins, and make
sure that each sub wallet is protected with encryptions. Bitcoin security and
safety tips are among the most important to adhere to.
 SEPARATE YOUR BITCOINS INTO TWO
WALLETS, HOT AND COLD

Digital wallets which remain connected to the World Wide Web are called
hot wallets since they are at greater risk from network-based attacks than
those wallets that are at rest on the local network. The offline wallet will be a
better tool for anyone running an online Bitcoin business of any kind. These
are safer to use and are less appealing to hackers. It is recommended that
most Bitcoins should be kept on an offline wallet, which is also known as a
cold wallet.
The bulk of your Bitcoin funds should be kept on the cold or offline wallet.
Safe deposit boxes may be used for this if that is what you desire. This will
allow you to hold a tiny amount of Bitcoins in your online wallet or web
wallet and use them for your daily Bitcoin transactions. In the event that you
will receive a large amount of Bitcoins via your online wallet, be sure to
transfer them as fast as you can to your offline wallet before the hackers
reach you.
 STORE YOUR PRIVATE KEYS OFFLINE
Any Bitcoin user should also remember to keep their private keys offline as
another Bitcoin security and safety tip. You probably know that Bitcoin
wallets utilize public keys for sending and receiving Bitcoins. Other
functions, including checking your Bitcoin balance, can also be performed
using the public keys. The public keys are also what you will use to authorize
Bitcoin transactions from your Bitcoin wallet. Anyone who would be able to
get their hands on your private keys can then pretty much do whatever they
wish with your Bitcoins without your knowledge.
For more security, store the private keys of your Bitcoin wallet somewhere
else that isn't connected to the internet, perhaps a separate computer. By
doing this, you will be 100% certain that it will be safe from hacker or
malware attacks.
To make a payment of a transaction that was generated online, bring it to the
offline computer with a USB stick, and enter the private key once it is already
on the offline computer. You will then need to return it to your computer and
complete the transaction there.
Inconvenient as it may seem, the security and safety of your Bitcoin is
protected by this measure. Making this choice will provide you with
significant extra protection for your wallet. It is crucial that you keep your
wallet protected since it usually contains a significant amount of Bitcoins.
Cold wallet compromises are very difficult since they require physical access.
 CONSIDER USING A DEDICATED
HARDWARE SYSTEM
You should use a dedicated hardware to process Bitcoin transactions. It is
possible to move data from your online computer to your offline computer
using an external USB key. In order to minimize the risk of exposure to
viruses, it could also help if you designate one computer exclusively for your
offline wallet. By doing so, its potential exposure to viruses and hackers will
be minimized.
 ON BOTH ONLINE AND OFFLINE
COMPUTERS, USE LINUX

A USB drive is the easiest way to move data between computers on the
internet and off the internet. The purpose of this is also to ensure the security
and safety of Bitcoin. A USB drive running Linux will be the least likely to
be attacked by USB-based attacks, therefore you should use this for
transferring Bitcoin transactions between online and offline computers.
 SECURELY BACK UP YOUR DATA OFFSITE
In the event that your computer is lost, stolen, or destroyed and your hard
drive fails to function, you lose all access to your wallet and especially to the
Bitcoins it contains. Because of this, Bitcoin experts recommend that you
back up your Bitcoin wallet. Using multiple backups on different servers is
one of the most useful tips for Bitcoin security and safety.
Based on your choice of wallet, you might be able to backup your wallet
every transaction or to do it only after every 100 transactions. This will
enable your wallet to remain updated with the most recent private keys, as
well as have access to your Bitcoins.
 USE A DETERMINISTIC TYPE 2 WALLET
One of the advantages of a Type 2 Deterministic Wallet, which can be
identified on both Armory and Electrum open source wallets, is that you can
generate future Bitcoin private keys deterministically with the help of a seed.
The result is that only one backup server will need to be created.
Since the backup has the seed, it can aid you generate another wallet utilizing
that same seed if you have misplaced your wallet accidentally. This way, it
will have the same private keys and Bitcoins in it.
 USE FRAGMENTED BACKUPS

There could be times when you only need to create a single backup of your
seed, but it is still encouraged that you generate many copies and store them
at different locations. Creating fragmented back-ups is a more secure option
if you are concerned on your backup's physical security. All six fragments
will make up the seed, so any four pieces will have to recreate it. Each
fragment can then be stored in various locations. A thief would need to have
access to all six fragments in order to steal your wallet, which is rather
difficult for him. The Armory web wallet offers the ability to create
fragmented backups, which offers the best security.
 MAKE USE OF THE HARDWARE WALLET
You will also want to invest in a hardware wallet if you want the highest
level of Bitcoin security and safety. Essentially, this wallet operates using an
on-board computer with a special operating system designed specifically for
managing Bitcoins.
Wallets like the Trezor are a good example of this type of material. Bitcoin
wallets can be stored on its hardware and the private keys will never be
divulged. The TPM or Trusted Platform Module of other laptop computers
works the same way, storing encryption keys.
You can easily use a hardware wallet to sign Bitcoin transfers in a matter of
seconds. All you need is a hardware wallet and your private keys. However,
Bitcoins will still be able to safely deliver and receive money even if the
online computer is affected with malware and other viruses.