Firstly, let me say that I LOVE the Bitcoin, which is (I hope) demonstrable by the sheer fact that I write this blog. It is, however, painfully obvious that if you have Bitcoin, you must be sure to keep them secure. This isn’t so much a problem with the Bitcoin system, it is more that Bitcoin is a “new” thing, and like any new thing, those of us without huge amounts of technical wizardry need to learn how to keep our Bitcoins safe.
It took online banking a long time to create procedures secure enough to keep online accounts safe from phishers, but with Bitcoin, for now, we have to take matters into our own hands. Once you have implemented a combination of security measures, your Bitcoins could actually be safer than normal money – credit card fraud is still rife, and after the last financial crisis, it isn’t altogether certain that the banks themselves are out of trouble.
So what should you do?
Firstly, a note on passwords.
If, like me, you get a pang of self fulfillment when your passwords are marked as “strong” by a new service, you’ll be horrified to discover that the measures applied by your average website, are actually pretty easy to hack.
See how long it would take to hack by entering your password here – you can just type your password to see how long it would take.
Consider applying a computer generated password, at least for your most precious online logins, of which Bitcoin may well be one. Whatever you do, don’t save those passwords to Google Chrome! Instead, keep your passwords somewhere safe, like an encrypted file on your computer, or even a piece of paper in your home. Writing them out in a way that won’t be obvious to others is also a good idea.
Secondly, how are you accessing your Bitcoins?
PCs are prone to viruses, whereas a Mac is more robust. Use your own computer, not a shared one, and don’t let others use the computer that you access your Bitcoins from.
Online exchanges are prone to being hacked – Mt.Gox is a prime example of an exchange that people are regularly losing Bitcoin from. There is only one level of security as a default on Mt.Gox accounts, so if someone gets your password, there isn’t anything else for them to get through.
Implement a double secure password on Mt.Gox if that’s where you trade by using the Google Authenticator app.
Opt for a phone based, or desktop wallet, and make sure that you back them up using private keys. With most wallets, you can export your private keys to a file relatively easily. Make sure you take a copy of that file to an external hard drive, and keep that in a safe (i.e. a Safe) place.
Stay secure out there coiners!