Though very different in the way they are used, a few parallels come be drawn between the physical wallet, for keeping fiat notes and coins, and the Bitcoin wallet.
For starters, both need indestructible safekeeping because there is always someone out there ready to pounce on them for what they contain.
It is also true that the first in line to stand guard over both kinds of wallet is you. There is no second or third party who is more concerned about your wallets’ safety than you.
The level of security measures taken to protect a wallet depends on the amount of money it carries. The more money, the more vigilant you need to be.
While for the physical wallet someone has to be in contact with you to get it, every con artist or thief from anywhere around the world has an equal opportunity to get to your Bitcoin wallet as long as he has access to the internet and you are dangling it online.
Therefore, the risk involved with Bitcoin wallets is relatively very high.
What you should know before you spring to action
The place to start in protecting your Bitcoin wallet is to acknowledge the following basics:
- The most-important part of your Bitcoin wallet is the private keys, which you should do everything within your powers to always keep private.
- That there are bad people roaming the internet looking for these keys to unlock your wallet and empty it.
- That theft is not the only thing you should guard against. Misplacing or losing these access details is as bad, because it will result in losing all the Bitcoins in the wallet forever.
- Those wallets that are connected to the internet in one way or another are riskier than those that are offline.
- That the type of wallet you choose from online, mobile and desktop paper has a bearing in the safety of your Bitcoins, which means your choice, should be backed with enough research.
Now that you know all the above what should you do?
The specific steps you should take to safeguard your Bitcoin wallet
While the measures needed to secure your wallet are more technical than tucking away your physical wallet in your trouser or jacket pocket, most of them are simple and straightforward-almost common sense steps.
Here are a few important ones:
- Keep larger amounts of Bitcoins in offline wallets, which are the most secure.
- Always encrypt wallet files on your computers or online servers
- Ensure your Bitcoin wallet passwords, especially for online based, are well kept because there is little recovery mechanisms in case you lose them.
- Back up your wallet, in cases you lose it in a device crash. You should have a copy in on USB, CDs or paper.
- Use multi-factor authentication, which involves having another set of query over and above the password. This can be in the form of an email, SMS or Google authenticator code that has to be input along with the password.
- Ensure you optimize all the private setting on your wallet such as restricting access to specific IP addresses or blocking TOR IP addresses.
- Update the wallet software on your smartphone or computer as often as possible in order to benefit from new security fixes and shake off hackers who have mastered the old versions.
With these steps, you can minimize the likelihood of you waking up one morning and finding everything you have worked hard for wiped from your Bitcoin wallet.