Secret #1 of 7
#1. How to keep our Bitcoins safe?
3 min read
Holding Bitcoins can be many times more secure than keeping our money at a bank. We just need to know how.
Want to know a secret? Two things that a lot of people don't know...
Bitcoins ONLY exist in the Blockchain.
They are created, stored and will forever remain in the Blockchain. This means that Bitcoins are never really transferred to a wallet.
The best analogy would be a title deed to a property. You can't take the land and property with you when you travel, but you can carry the document that proves your ownership.
A Bitcoin wallet DOES NOT STORE Bitcoins.
Instead it stores your digital credentials that prove your ownership of your Bitcoins.
Best way is to think of it as a very strong “password” or “key phrase” so that you alone can access your Bitcoins.
There are several types of wallets to choose from.
If you already KNOW about wallets, skip to the next step.
If you want to KNOW MORE, keep reading.
Paper wallets store ownership on paper.
They are simple to use and completely free.
They are VERY SAFE since nobody else is involved.
We will need to store them somewhere safe where other people can't find it. We could keep a copy in a safe at home and another one in a safe at a bank.
Don’t carry them on you! It would be like carrying a paper printout of the pin code to all of your savings accounts!
Software wallets store ownership on your device.
After we type in the password to our software wallet they will connect to the Blockchain and we can access and use our Bitcoins.
They are RELATIVELY SAFE.
A virus or key logger might still be able to intercept that data and access our software wallet if our device is inadequately protected. Always use antivirus software and be selective about software that you install.
Also think of what will happen to our software wallet when our device crashes, breaks down or gets stolen? When in doubt, always get a hardware wallet instead!
Hardware wallets store ownership offline.
They are some of the SAFEST ways to store our coins, especially when we travel and are recommended for when we amass a lot of value.
We recommend buying two of the same model. We can keep one at home and carry the other one with us when we travel. That way, even when we lose one of the hardware wallets, nobody else can use it and when we get home, we can immediately access our funds from our second wallet instead of waiting for a new one to arrive in the mail.
Online wallets store ownership on a website.
We only need to remember our username and password to get access. They will connect our credentials to the Blockchain.
Choose a reputable online wallet to be RELATIVELY SAFE.
However, if you use a simple username and password that you also reuse on other sites, a hacker can easily access your funds. Also there is the possibility that a site may get hacked, or worse, just cease to exist! Paper or exchange wallets are safer!
Exchange wallets store ownership on an exchange.
Reputable Bitcoin exchanges spend a lot of money on security and are required to have “Know Your Customer (KYC)" rules in place, so they are generally much SAFER THAN ONLINE WALLETS.
The added benefit is that with proper training, we can earn money with our funds by trading them on the exchange.
Over the years, we’ve gathered many more tips and techniques to keep our money and profits safe, which have been considered extremely useful by our students.