Coinbase is a Bitcoin wallet
Secure your wallet
Be careful with online services
You should be careful with services designed to hold money online. Many exchanges and online wallets have recently suffered from security vulnerabilities and in general such services do not offer enough security to store your money there like at a bank. Therefore, you should use other types of Bitcoin wallets. Otherwise, they should choose online services very carefully. It is also recommended to use two-factor authentication.
Small amounts for daily needs
A Bitcoin wallet is like a purse with cash. If you don't keep several thousand euros in your wallet, you shouldn't do the same with your Bitcoin wallet. In general, it is a best practice to only have small amounts of bitcoins for everyday use on your computer or smartphone and to keep the rest of your assets in a safe place.
Make backup copies of your wallet
Backing up your wallet in a safe place can protect you from loss due to computer defects and many human errors. A backup also enables you to regain control of your wallet after your smartphone or computer has been stolen if you have encrypted your wallet.
Make backup copies of your entire wallet
Some wallets use numerous hidden private keys internally. If you only have a backup of your visible Bitcoin addresses, you may not be able to recover a large part of your funds.
Encrypt online backups
The risk of theft of a backup copy stored online is very high. A computer connected to the Internet can also be infected by malicious software. It is therefore advisable to encrypt backup copies if you can be reached over a network.
Use a variety of secure locations
Individual vulnerabilities are bad for security. If your backup doesn't depend on a single location, the less likely that a negative event will result in your inability to restore your wallet. Consider using a variety of media such as USB sticks, paper, and CDs.
Make backup copies regularly
You should regularly back up your wallet to ensure that all recently created Bitcoin Change addresses and all Bitcoin addresses are included. Soon, however, all applications will use wallets that only need to be backed up once.
Encrypt your wallet
If you encrypt your wallet or your smartphone, you can set a password, which is required to use money from it. This measure helps protect against thieves, but it does not protect against keylogging hardware or software.
Never forget your password
You should make sure that you never forget your password or your money will be permanently lost. Unlike your bank, there are very few ways to reset a forgotten password with Bitcoin. You should even be able to remember your password even if you haven't used it for several years. If in doubt, you can consider keeping your password on paper in a safe place, e.g. in a safe.
Use a strong password
A password that consists only of letters or recognizable words is considered to be very insecure and easy to crack. A secure password must contain numbers, digits and special characters and be at least 16 characters long. The most secure passwords are those generated by programs that have been specially designed for this task. As a rule, it is more difficult to remember strong passwords, which is why you should remember them carefully.
Offline wallet for savings
An offline wallet, also known as "cold storage", offers the highest level of security for your savings. A wallet is stored in a secure location that has no connection to the Internet. When properly implemented, it offers very good protection against security gaps. It is also advisable to use offline wallets in conjunction with backups and encryption. Below is an overview of various approaches.
Offline signing of transactions
With this approach, two computers share parts of a wallet. The first must not be connected to a network. Only this saves the complete wallet and can sign transactions. The second computer is connected to the network, has only an observing wallet and can only create unsigned transactions. You can safely initiate new transactions with the following steps.
- Create a new transaction on the online computer and save it on a USB stick.
- Sign the transaction using the offline computer.
- Submit the signed transaction using the online computer.
Since the computer connected to the network cannot sign transactions, it cannot be used to transfer money in the event of an attack. Armory can be used to sign transactions offline.
Hardware wallets offer a balance between very high security and ease of use. They are small devices designed from the ground up to be a wallet (and nothing else). Additional software cannot be installed on them, which protects them against computer attacks and online thieves. Since they can allow a backup, your money can be recovered if you lose the device.
Keep your software up to date.
Using the latest version of your Bitcoin software enables you to get important stability and security updates. Updates can fix problems of varying degrees, contain new useful functions and help to keep your wallet safe. Installing updates for all other software on your computer or smartphone is also important to keep the wallet environment secure.
Multi-signature to protect against theft
Bitcoin offers a multi-signature feature in which a transaction can only be carried out if there are several independent releases. An organization can use the multi-signature to give its members access to their assets and at the same time only allow withdrawals if 3 out of 5 members sign the transaction. Some web wallets also offer multi-signature wallets, which gives the user the ability to keep control of their money and at the same time prevents a thief from stealing money by compromising a single device or server.
Think about your will
Your bitcoins can be irretrievably lost if you don't have a backup plan for family and friends. If at the time of your death the location of your wallets or passwords are unknown, there is no hope that your money can ever be recovered. Take a little time to do these things; it can make a world of difference.
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