The year 2023 is coming, and the world has changed in the blink of an eye. Bitcoin and other cryptocurrencies are legal tenders. Â Anyone can buy or sell them without converting them to fiat currency. But with soaring prices, this new reality has led to a resurgence in cybercrime: cryptocurrency theft. Â
Not only the theft of cryptocurrency but the uncertainty of the crypto market has also affected the business stability of many large crypto exchanges where many people store their assets. Bankruptcy or lack of liquidity in an exchange can mean a loss of assets for the exchange users.
Is Bitcoin Safe?
Bitcoin (BTC) is a virtual currency designed to act as money and a form of payment outside the control of any one person, group, or entity. Bitcoin removes the need for third-party involvement in financial transactions, making it decentralized.
Bitcoin is run by the blockchain and the network required to power the chain. The blockchain is a distributed ledger, a shared database that stores data. The data within the blockchain is secured by encryption which help keep the data secure from any changes in the ledger.
The underlining technology of Bitcoin is safe. It is almost impossible to get through the encryption and change to the distributed ledger to make any false transactions. Any transactions you make on the blockchain are stored and are public for anyone to see.
As an investment, Bitcoin can be quite risky. Prices of cryptocurrency, including Bitcoin, fluctuate strongly daily. If you are not careful, you might lose a lot of money. Every time you buy Bitcoin, there is a risk, as well as the possibility of reward.
Apart from fluctuating prices, another risk to Bitcoin is the possibility of having all of what you own stolen from you. This has been a big issue for many investors over the years, and it is getting increasingly serious.
Losing Access to Your Bitcoins
Most people keep their Bitcoins and other cryptocurrencies on exchanges. Popular exchanges like Binance, Coinbase, and Kraken have millions of people storing coins. However, maintaining Bitcoins on exchanges carry the biggest risk of you losing your Bitcoins.
Firstly, exchanges are online entities with millions or billions of dollars inside them. They are very attractive targets for hackers to steal money from. We have seen news of exchanges getting hacked and millions of dollars stolen every year. One of the biggest hacks was the Mt.Gox exchange, where many users lost their money.
Another thing that could happen is with the uncertainty of the crypto market. Exchanges could run out of liquidity and becomes bankrupt. Upon bankruptcy, all of your crypto stored inside the exchange will disappear. This can happen overnight and you will not have enough time to withdraw. FTX exchange went bankrupt this year and many people were unable to withdraw any of their assets from the exchange. Experts have said that they probably will never be compensated for the loss.
Keep your Bitcoin Secure with Crypto Wallet
Crypto wallets are developed so that people have a more secure alternative to store their Bitcoins instead of exchanges. Crypto wallets give you full custody of your Bitcoins, unlike exchanges that hold onto the coins for you. With crypto wallets, no matter what happens to the world, you will still have access to your Bitcoins as long as the blockchain is still running.
Different kinds of Bitcoin Wallets
There are many kinds of Bitcoin Wallets. They are similar, but they have different levels of security.
Hot Wallets:
Hot wallets are Apps or softwares you can download for free onto your phone or computer. They are fast and easy to use and provide a good level of security. Because they are installed on phones or computers that have quick access to the internet, it is easy for the users to make transactions.
Nonetheless, because it is always online, phones or computers can be easily hacked or have malware inside them. Users of hot wallets must always vary on these risks and avoid other people using their phones or computer.
Popular hot wallets include Trust wallet, Atomic wallet, and Metamask.
Cold Wallets:
Cold wallets are devices that are specially designed to store Bitcoin. They are mostly small, portable, and can be linked to a phone or computer to access the blockchain. When left alone, it is completely offline and can help secure your Bitcoins from all kinds of hacking. It is much more secure than a hot wallet.
One of the best cold wallets in the market for Bitcoin is the ELLIPAL Titan Mini cold wallet. Not only it has a very user-friendly and portable design, it is also very secured. With ELLIPAL's unique air-gapped technology, your Bitcoins are protected from any kind of hack.
Paper Wallet:
Paper wallets are normally first generated on a computer, and are early forms of wallets. A QR code is then printed out on this piece of paper. You can simply scan that QR code with a hot wallet whenever you want to make a transaction.
The paper is always offline so it is safe from hackers. Nonetheless, paper wallet users must vary because paper can be damaged easily.