Criminal Downsides to Bitcoin
Malware authors broke new ground with the emergence of file-encrypting ransomware called CryptoLocker in 2013. This strain was the first one to actually encrypt victims’ data and leverage digital cash for ransoms. The employment of Bitcoin for this purpose became a significant enhancement of the extortionists’ agenda. It improved the anonymity of attackers because crypto transactions are difficult to track, especially if they are scattered over multiple Bitcoin wallets.
Parallel to the growth of ransomware, Bitcoin has also grown significantly, especially throughout 2016. Still, ransomware is not the only criminal downside to Bitcoin. The very design features that make Bitcoin technology appealing to its users are also weaknesses being exploited for its theft. The transparent design features promote trust in Bitcoin. However, the very same transparent features are presenting multiple opportunities for theft and fraud.
Bitcoin Theft and How to Prevent It
For example, insecure passwords can lead to Bitcoin being stolen – mostly through phishing scams. The irreversible nature of transactions means that stolen Bitcoins diverted to another wallet, due to hacking or dishonest trading partners, cannot be either reversed or recovered.
There are, however, some steps to consider in order to secure your Bitcoin wallet.
You need to back up your wallets just like you back up your data. Luckily, not much space is needed to store backups of Bitcoin wallets. Get more than one hard drive and USB sticks. Make sure that your wallets are as safe as they can be. In fact, make it a rule – never back up to just one external memory and consider it done.
2. Encrypt your online backups
Keep in mind that any backup stored online is susceptible to theft. Unfortunately, a computer that is connected to the Internet is also vulnerable to malware, ransomware and data theft. Thus, encrypting any backup exposed to the network is an excellent security habit.
3. Encrypt your wallet, too
Encrypting your wallet enables you to set a password (that should be strong and unique) which will get in the way of unauthorized entities trying to withdraw your funds. This step helps protect against thieves, but unfortunately it will not save you from keyloggers that capture passwords.
4. Keep an offline wallet (cold storage)
Keeping an offline wallet is the most secure method for savings. It simply means storing a wallet in a secured place that is not connected to the network. When done accurately, cold storage is also a great security measure against computer vulnerabilities. Overall, an offline wallet combined with backups and encryption is the best thing you can do.
5. Forget about your smartphone
Even though smartphones are all about convenience, it is not a good idea to use it for Bitcoin. In other words, it’s a bad idea to use your smartphone for primary storage of your funds. As to why – what if your phone got lost, stolen or compromised? Also, keep in mind that Sirin Labs, the company behind the $14,000 Solarin smartphone, is currently working on an open-source model, running on a fee-less blockchain.
6. Secure your computer
Update it frequently, and install a strong anti-malware program. A vulnerable computer directly endangers your Bitcoin wallet. Choose your security software carefully. It should be able to detect the latest forms of spyware, Trojans, rootkits, ransomware, keyloggers and other types of malware that put your data and cryptocurrency savings at risk of hacking.