If you’re new to the world of cryptocurrency, you may be readying yourself to buy your very first Bitcoin. But how can you make sure you’re doing so safely? Let’s take a look!
When buying Bitcoin, only two things really matter: the ownership and the security of your coins. What counts is that the key that gives access to your Bitcoin – your private key - is in fact that: private.
CHOOSING AN EXCHANGE
When looking to purchase cryptocurrency, the first step is choosing the right online exchange. But beware, not all exchanges are created equal! It’s important to do your research in order to choose one that prioritises authenticity and security. If you’re unsure, it’s best to go with the most well-known and long-standing cryptocurrency exchanges.
AFTER PURCHASING BITCOIN FROM AN EXCHANGE
There’s no doubt that exchanges are a convenient way to buy and manage cryptocurrency: you simply have to log into your account via an application or website in order to view your account balances and make transactions. But when you decide to leave your cryptocurrency on an exchange, you’re trading safety for convenience.
You see, because exchanges hold billions of dollars worth of cryptocurrency, they are enticing targets for hackers. Overall, it is estimated that at least $11 billion worth of cryptocurrencies have been stolen since 2011.
Here are the facts:
- Exchanges lose $2.7 million every day on average, and this figure is set to increase in the future.
- Hacking attacks are becoming increasingly elaborate. It's a highly-rewarding activity; therefore it pays for ever-increasing time and effort spent on plotting hacks.
- Exchanges are not cybersecurity enterprises. They run financial marketplaces first, and experience has shown they can’t guarantee top-notch security.
It’s also important to note that when you store your assets on an exchange, you are giving up ownership of your private keys. Exchanges in fact store the private keys on behalf of their users and instead, you are given access to your cryptocurrency via a username and password to log into their website.
What happens if their website disappears? Well, so does your cryptocurrency. (if you don’t believe us check out the Netflix documentary ‘Trust No One: The Hunt for the Crypto King’ about the cryptocurrency exchange Quadriga!).
It’s for this reason that we recommend moving your Bitcoin off the exchange after you have purchased it. But where to?
COLD STORAGE HARDWARE WALLETS
Cold Storage hardware wallets allow you to move your assets offline AND keep ownership of your private key. Your private keys are generated and stored on the hardware wallet which is then protected by a PIN and an optional passphrase. The keys are never exposed to the internet so they can’t be stolen or copied. That’s why it’s known as cold storage.
Here at Coinstop, we are all about security & privacy. That’s why we stock the very best in digital security. From hardware wallets to recovery seed phrase storage devices, our products will help you to become your own bank. You can visit our store here.