Financial safety and security should be a top priority for anyone considering investing in Bitcoins, and this guide will cover some of the risks associated with the Bitcoin digital cryptocurrency as well as the industry best practices for keeping your investment safe. While there are certainly many benefits to using Bitcoin for transactions, the fact remains that it is still an experimental digital currency, and while it is gaining in popularity there are also a number of security risks associated with it that you need to know about in order to keep your digital wallet and Bitcoin investment safe.
Lose Your Password, Lose Your Bitcoins
One of the key defining features of Bitcoin transactions is that there is a public security key and a private security key that is required to complete every transaction. The public security key is the one that defines the encryption protocol that makes Bitcoin transactions possible, and the private security key is a personal password that is chosen by the owner of the digital wallet. It is very important that you always remember this password, because if you lose your private security key for any reason then it can be close to impossible to access the Bitcoins that are stored in your account.
Digital Wallet Is Unencrypted By Default
Once you download and install your digital wallet software, it is important to become familiar with the functions and settings of the software which includes the encryption settings. The default configuration setting of the original Bitcoin digital wallet software are configured to be unencrypted, meaning that only the public key encryption is used for the transfer of Bitcoins. In order to protect the Bitcoins in your digital wallet to the fullest extent it is a good idea to activate the private encryption settings.
You Can Still Use Bitcoin Safely And Securely
Once you understand some of the potential cyber security risks associated with using a 100% digital currency then you can make sure that you are keeping your Bitcoin investment safe and secure by staying on top of any potential security threats. You can even keep your Bitcoins in cold storage which will protect them in a computer or flash drive that is not connected to the internet, so that there is no threat of them ever being stolen or compromised. By following these tips about financial safety using Bitcoin, you can confidently try out the new digital currency while keeping your investment safe from fraud.
With the rising popularity of the digital cryptocurrency Bitcoin, it is extremely important for all Bitcoin users to learn all the information that they need in order to protect their digital wallet and keep their investment safe. With bitcoins being 100% percent digital and having no tangible or numismatic value such as gold or silver, never before has it been so easy for computer hackers to compromise your account since it is all stored within a software program called a Bitcoin digital wallet. By following these important safety tips you can be sure that you are having the safest bitcoin experience possible.
The Digital Wallet Is Unencrypted By Default
The very first thing that you should do in order to ensure your financial security with the Bitcoin digital currency is to familiarize yourself with the digital wallet software that you are using, as well as all the different settings of the software. The classic Bitcoin digital wallet software is configured to process transfers in an unencrypted manner according to its default settings, and this can be a security threat that can put the money in your digital wallet at risk. You should modify these settings so that all transactions are automatically encrypted, which will mean that you need to select a secret passcode and then enter that private code every time you make a transaction.
Keeping Your Private Passcode Secure
The Bitcoin algorithm depends on a public encryption key as well as a private passcode that you designate for your specific digital wallet in order to transfer money. It is very important that you always know your password and that it is not easy for anyone else to guess. Without the private password nobody will be able to access the Bitcoins in your digital wallet, including yourself if you end up losing your password, and with the private password anybody can send your bitcoins to any other bitcoin address.
Watch Out For Spyware On Your Computer
One of the easiest ways for computer hackers to steal your sensitive data is to infect your computer with a malicious piece of software called a keylogger, which will record the keystrokes on your keyboard including your password. Remember that with the private passcode in hand any other person will be able to transfer bitcoins out of your digital wallet to any other Bitcoin address, and this transaction will be irreversible. Pay attention to these important tips if you are just getting started using the digital currency Bitcoin, and you should be able to guarantee the safety of your account.
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Bitcoins are currently growing in popularity with the number of individual investors willing to denominate part of their money in this new digital currency, as well as a growing number of businesses that are willing to accept Bitcoin cash payments. This is a new type of digital money that is completely decentralized in nature and relies on a peer-to-peer network connected to the internet in order to function and process payments. Here are three of the most important reasons why you should consider using Bitcoins for payment.
Bitcoin Is The First Decentralized Currency
For most of modern history our money and currency has been controlled by a central bank and a network of smaller banks, and electronic payments having been facilitated using an electronic automated clearing house facility. But the Bitcoin network changes this drastically because transactions are processed on a peer-to-peer basis rather than having to be processed through a central electronic clearing house or other centralized financial institution. The fact that Bitcoin is decentralized means that it is not issued by any government as regular currencies would be, and therefore the value of Bitcoins is not tied to any type of geopolitical events while still being accepted as payment and a medium of exchange.
Bitcoin Acts As A Hedge Against Inflation
One of the reasons that this type of digital currency has been growing in popularity at such a rapid rate is that many people are increasingly becoming mindful of government policies designed to erode the value of traditional currencies over time and are looking for a financial hedge against this erosion of value. One of the reasons that money denominated in Bitcoins is largely immune from inflationary pressure is that there is a fixed money supply of 21 million Bitcoins that can never be exceeded, meaning that the owners of Bitcoin cannot simply print more money the way that central banks and governments can.
Transaction Fees Are Lower With Bitcoins
Because of the decentralized nature of the Bitcoin payment network and the block chain that makes Bitcoin financial transactions possible, there are little to no fees when it comes to transferring Bitcoins from your digital wallet as payment. This can save money for both the vendor or merchant and also for the individual who is using Bitcoin to make a purchase. By learning about the important benefits of using Bitcoin over any other regular currency, you can see if this type of digital currency is the right choice for you.
If you are realistically considering allocating some of your money into Bitcoins then it is very important for you to take the time to educate yourself about how Bitcoins work and how you can stay safe and protect the integrity of your investment by following a few industry standard safety tips for using Bitcoins. Online safety should be a critical concern for anyone who currently owns any amount of Bitcoin in a digital wallet since this currency is completely digital and has no tangible or numismatic value the way that a gold or silver coin would.
Protect Your Digital Wallet Private Key
One of the critical features of storing Bitcoins in a digital wallet is that the only way to transfer money out of the digital wallet is to enter the private key, and anyone who gains access to your private key can therefore move money out of your digital wallet. This also means that if you lose the private key to your digital wallet for some reason then you will be locked out and unable to access your finds. Therefore it is critically important that you protect your private key from other people and make sure that you never forget it.
Do Not Post Your Bitcoin Address Publicly
It is not good for your online safety to post your Bitcoin address anywhere public on the internet which is tied to the real digital wallet account where you keep any significant amount of Bitcoins. Once you have posted your Bitcoin address to a publicly accessible page on the internet then it can be possible to tie your real world identity to your Bitcoin transactions as well as making your digital wallet a target for hackers to try and crack your private key to access your funds.
Watch Out For Bitcoin Related Scams
Unfortunately today there are many Bitcoin related businesses and websites that are not necessarily legitimate or even legal, and these people do not have your best interest at heart and are really only trying to gain access to the funds in your digital wallet. One way to avoid falling for any Bitcoin related scams is to take the time to do due diligence and proper research before you invest any real money, and this can mean searching the internet for any legitimate reviews related to the website you are considering doing business with. By taking the time to educate yourself about the online safety tips for using Bitcoins and making sure you do not fall for any Bitcoin related scams, you can make sure that you are using this new digital currency with confidence and that your digital wallet is safe.
If you are an investor or early adopter of the Bitcoin digital currency then an important metric that you will want to monitor is the Bitcoin exchange rate as it relates to US dollars as denominated by the symbol BTC. It is realistic to say that Bitcoins are still in their early adopter phase of technology even though an increasing number of stores and ATMs accept the digital currency, and anyone who has some of their money denominated in Bitcoins should monitor the exchange rate on a regular basis to see what their investment constitutes in a dollar equivalent.
Trading The Bitcoin Exchange Rate
There are some advanced traders and investors who are participating in the Bitcoin digital marketplace that are not buying the digital currency to buy and hold it over a long period of time, but instead are trading the Bitcoin exchange rate up and down the same way that you would trade the price of a major currency pair. It is also important to understand the differences between denominating your money in Bitcoins and denominating it in a regular first world currency such as the dollar, pound, or euro.
There is a lot of safety and financial stability in the major world currencies that exists and will persist, yet there are a number of revolutionary benefits associated with Bitcoin that are seen as very promising even though it is still a bit risky. One of the major differences is that all Bitcoins exist in digital form as a piece of software code instead of being a physical asset that you can touch with your hands like cash or gold. This means that all of your Bitcoin holdings are contained in your digital wallet which is a software program that can run on your desktop computer, laptop, or mobile phone.
The Price Volatility Associated With Bitcoins
One of the characteristics about investing or trading in Bitcoins that many individuals see as a risky disadvantage is that the price of Bitcoins is extremely volatile and it has been known to move over $ 100 in just several days. This is not a positive feature if you are someone who is trying to passively invest in Bitcoins by buying and holding them in order to try and see your asset value increase over time. While Bitcoin is still in its experimental phases there are more and more people using the new digital currency every day, and by learning about how the Bitcoin exchange rate performs you can decide if you are ready to jump on the Bitcoin bandwagon.
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