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Home » How to Protect Your Bitcoins [Practical Guide]

How to Protect Your Bitcoins [Practical Guide]

Even though this industry is only a little over 12 years old and has gained much attention, the general public still does not seriously take their Bitcoin’s security.

How to Protect your Bitcoins. Anyone can become a victim of cryptocurrency theft if they do not follow good practices. The result is plain to see. Large amounts of money are lost or stolen. Bitcoin’s enormous advantages in terms of decentralization also mean that hackers can disappear with all the money. 

And it’s also not very nice not to have a backup copy to access a wallet with access to several BTC that have now become entirely unreachable. That’s what we will talk about today, showing you the dangers and the best tips for keeping your BTC protected.


Why protect your Bitcoin?

After it hit all-time highs in late 2017 and 2021, Bitcoin has become a major digital asset for investors and thieves alike. And that’s because as new people joined this ecosystem, especially those with no cybersecurity experience, the more interesting BTC became for the misnamed hackers. Not only that, but they have been generating new ingenious ways to take control of the bitcoins of the most unwary. 

Just like we keep fiat money or credit cards in a purse or wallet, we also use apps called by the same name to manage our bitcoins. Today, We will discuss many types of cryptocurrency wallets while showing their strengths and weaknesses. 

It is essential to understand that it is not a wallet as such, with cryptocurrencies inside it, but only manages the private keys that allow us to access them on the blockchain. Some options will be more secure, but it is interesting to understand that protecting our bitcoins is up to us. We are the ones who determine how safe we want them to be. 

Your responsibility

Cryptocurrencies, especially Bitcoin, give users great power, transforming them into their banks. But that comes with a huge responsibility that not everyone contemplates. One of the main risks of Bitcoin is that the user loses the private key or that someone has stolen it. We will not access the BTC without this private key, even though we know how many are in that wallet. Ultimately, it is a tough job that few people take the trouble to learn when they start with Bitcoin. 

Many investors or holders of cryptocurrencies like Bitcoin or Ethereum buy from a crypto exchange and then hold them on that platform. These platforms are custodial wallets, which keep people’s cryptocurrencies in custody by holding their private keys. They may have a mechanism to protect users’ BTC or ETH, but it is a massive gamble at the end of the day. 

The best way to protect our investment is with a non-custodial wallet, one in which we have full control of the funds, i.e., the private key. There are two groups of wallets, hot and cold (also known as online and offline). Suppose we are looking for the most secure alternative. In that case, it will probably be the cold wallets, especially the hardware ones, which in the end, implement a series of crucial measures to guarantee the security of our funds. Let’s see what other types of wallets exist within these two groups.


Types of crypto wallets

Hot Wallets

Online or hot wallets are so-called because they have an online connection, making them problematic offers for attackers to refuse.

The different options that exist are:

These wallets risk creating and sometimes keeping the users’ private keys on connected devices. They are very convenient when accessing our funds and making and sending transactions, but we give up some security in return. Of course, they are not a complete danger, and their use is sometimes interesting. Few people take the necessary precautions because they don’t know how to protect their money. 

It is not uncommon to read that someone has been robbed of funds in different ways. If we go to Reddit, we will find posts telling what has happened to their bitcoins for not storing them correctly. The whole point of these wallets, or at least how we should use them, is as a place to carry little change. We don’t go out with our wallets loaded with euros or dollars when we leave home, only with what we need to have a coffee or make a small purchase. That should be the purpose of these wallets.

Beware of hot wallets

The central idea of all this, and I repeat this for clarity, is to have as few funds as possible and to use another medium, as we see below, to store the more significant amounts. A mention must be made of the exchange wallets because, as we have already said, we do not have control over those funds, but a third party, presenting the risk of someone stealing them, a server with hundreds or thousands of BTC, is very tempting. This company will disappear in the future. 

It may sound crazy, but banks, institutions that we consider safe because they have physical brick-and-mortar offices, have “disappeared,” leaving their customers without money. Few of these companies have insurance to replace cryptocurrencies in case of a problem. And while they have security measures in place, such as holding much of the funds in cold wallets, at day’s end, it defeats the purpose of cryptocurrencies.


There is a phrase that goes:

Your keys, your bitcoin. Not your keys, not your bitcoin. Andreas Antonopoulos


And I couldn’t agree more. In the end, so much technology and advantages to give power to someone else is not the wisest decision in the world. But these wallets have internet connection problems, creating an attack point for anyone who wants your cryptocurrencies. That’s why we will now look at the second group, which is more secure.

Cold Wallets

The other group of wallets we need to discuss, the more secure option of the two, is the cold wallets or offline. Just as hot wallets connect to the Internet, the key to these wallets is that they never connect online, at least not directly, which offers excellent benefits in protecting our cryptocurrencies. 

Perhaps they are inconvenient when sending transactions since you have to take a few extra steps. But if we want to control our funds, it’s as easy as looking at the Bitcoin address in a browser.


Paper Wallets

One of our options within this group is paper wallets, which are usually very secure but impractical because we write down the private key or seed phrase on paper. You can use the key or phrase in another wallet to sign transactions. But as long as we keep it offline, it is an excellent way to protect our BTC. 

However, we must be careful with this method because the sheet of paper can be damaged due to various circumstances and make the wallet completely useless. Some people choose to laminate or use another material, such as wood or metal, to write the information.

The next important thing about these wallets is finding a safe place to store them. So no one can see the physical item and where it cannot be stolen or suffer an accident.


Physical Wallets

Physical wallets are similar to the USB sticks we use daily, although they are bigger and have a screen. Makers create these devices to store the user’s private key without revealing it. Inside them is software that takes care of all the technical details to make this option the most secure, from signing the transaction inside the device to never revealing it to requiring the user to enter a PIN to approve it. Since they connect to a computer to gain access to the Internet and what is transmitted is the transaction, no matter the security level of the PC, the hardware wallet is not affected. 

Some options feature open-source software, leaving it up to the community to determine their security. The downside is that while they are the best choice for someone who cares about security, they come at a cost that not everyone wants to pay at the end of the day. 

Cold wallets are the best option for storing Bitcoin, although they require extra steps when sending funds. They need some additional technical knowledge to use and get them up and running, but it is well worth it if we intend to have a lot of BTC. If you are starting, learning what alternatives exist and analyzing them is good. Then, decide whether you can afford to spend on a wallet or use a free option.


Protecting your online Wallet

The easiest option to start with Bitcoin or other popular cryptocurrencies is to make an account on Coinbase or Binance exchanges. We know they are not the best options in terms of security. Still, when you are just starting and don’t know anything about this world, the truth is that it is not very comforting to overwhelm yourself with so much new information that you are absorbing to learn about this sector. 

Knowing what a private key or address is in the exchange’s wallets is unnecessary. They make everything easy so that someone with little knowledge can operate. Even these services are very similar to those found in a bank account. 

We do not need anything special, just a browser or download an app to use them. That’s why I will give you some tips oriented explicitly to keeping this wallet safer so you don’t have a bad experience. Just remember to use them for small amounts and to learn then it is a good idea to learn about the other wallets. Here are the best practices to raise the level of security:


Use Double Authentication Factor (2FA)

Most of these services have what is known as two-factor authentication. 2Fa is important because when we activate it in the app or the browser if an attacker knows our email and password, he will have to enter an extra piece of information that is very difficult to obtain.

Do not use the phone as 2FA

Not all 2FA methods are equally secure, and most likely, when we set it up, it will give us the option of several mechanisms. I can advise you never to use SMS to secure your account; some more advanced attackers have a way of “hijacking” your phone and intercepting this code. 

If you have the phone number associated with your account, it is best to use a different number to receive the code, a secret SIM card no one knows.

Use separate email accounts

I’m sure you are just like many people who use a separate email for daily communications, our Facebook, Twitter, PayPal, etc., account. We share the address with everyone: friends, family, and co-workers so that they can send us things, but it’s easy for attackers to know.

If our exchange account is tied to this email, the attacker already has vital information to access our wallet. The advisable thing to do here is to separate the emails, one for personal use and one for the wallet (that you do not use for any other purpose). Different email addresses minimize the chances of a malicious agent discovering your account.


Tips to protect your Bitcoins

Now that we have all the information to understand our problem, we can move on to the practical tips that will help us protect bitcoins.

1. Choose a Hardware Wallet

Many Bitcoin wallet options are on the market, making choosing difficult. But if we are concerned about security, we should turn to an offline wallet and, if possible, a hardware one. 

We know they cost approximately $100/€80, but the price is justified when we have that value in cryptocurrencies. I like to see it this way if we have $100 in an unsecured wallet, it means the possibility of losing it and having $0. It is better to have $0 in cryptocurrencies but a wallet of that value that will serve us in the future. 

Maybe it is a bit extreme, but it is best to think about shopping when we pass a number we no longer feel comfortable losing. The best options are Trezor and Ledger, which offer several models with different features and pre-installed security and encryption capabilities.

2. Keep the private keys offline

The attackers and we are interested in the private key, so keeping it offline and away from prying eyes is best. We saw a paid option and even the possibility of writing it down on paper. We can even memorize it and create what is known as a mental wallet, although we do not recommend it. 

Whichever system you choose, taking the necessary precautions to avoid an unpleasant surprise the day we need it is critical.

3. Always use a secure Internet Connection

Public internet connections, such as those in a café or airport, have serious security flaws. If you have a wallet on your computer, perhaps it is better to use your cell phone connection.

Of course, if we can avoid any gadget sending a transaction and wait until we get home, all the better. However, this does not imply that we are completely protected.

4. Use a good, updated Antivirus

While Windows users are vulnerable to various malware, all operating systems share malicious programs. We must check that the computer has reliable antivirus software installed. Viruses and malware are the gateways to our devices, so scanning before installing the wallet is essential.

5. Do not access suspicious links or web pages

Curiosity killed the cat, which is why some links and buttons on the Internet look very attractive to click. We must be careful with these, as they can be dangerous. If we feel something is wrong, it is because maybe you are. Don’t download pirated movies or watch inappropriate things on the same computer where you have your coins. That’s a bad idea. 

If you use an exchange wallet or website, verify that you visit the official URL before entering any data. Some attacks consist of replicating entire websites to make the user believe that he is browsing in the right place. We must also be careful with email scams, such as phishing, which involves sending emails inviting you to click on a link and then stealing your information.

6. Use a very strong password for your online wallet

Choosing the password is not trivial, like entering “123456” or “password,” nor should it be your home address or any data anyone can get. That’s the first thing an attacker tries. Phone numbers, birth dates, names, favorite movies, that’s information you’re sure to share freely on your Facebook or Instagram feed. 

Look for an alphanumeric combination that makes sense only to you or doesn’t, and avidly write it down somewhere safe. Also, try adding special characters to make it even harder. Another thing to consider is not to use the same password for all services.

7. Never reveal your Private Key

If you want access to your BTC, the private key has to be seen by your eyes and, in the worst case, by another person. It should not be shared with anyone; do not ask anyone to make a transaction. Avoid any proposal to share the private key with a third party, no matter what.

8. Keep a separate wallet for your daily transactions

If you need to make daily transactions, such as buying coffee or paying for parking, it is best to have a separate wallet where you keep a tiny amount. There is no limit to the number of wallets we can create, so take advantage of that.

It is extra work because we must continuously send funds from our central purse to the daily bag, but it will pay off.


9. Use the Double Authentication factor (2FA)

We talked about this before, and when it comes to exchanging wallets or some mobile ones, it is good to activate this extra authentication measure that is simple but effective.

10. Always check the Bitcoin Address

When you make a transaction, always pay attention to the address you send the money to.

Malware running in the background can intervene when we copy and paste Bitcoin addresses to change the result and send our BTC to another address. If we do not pay attention, we can send the money to someone else.


11. Make backup copies of your Digital Wallet

A backup copy will allow you to access your wallet if you lose it or your device breaks down. These are files generated by the wallet or seed phrases. Choose a place other than the wallet to store the backup copy securely. In case of theft, we can recover the wallet with this information. 

Even if they cannot access the wallet inside the device, we will want to remove the funds as a precaution.

12. Encrypt your Wallet

The wallets we generate on the computer or a cell phone can create a file to retrieve the wallet, a backup copy, as we have already seen. But we must encrypt this file, either with the function offered by the wallet or with an external program. The idea is that we can only access this file, which contains the private key, with a password. If a hacker gets access to the file, he cannot get to the key’s most critical part.

13. Use Multi-Signature (MultiSig)

The concept of a multi-signature wallet is crucial because it allows dividing the responsibility and increasing the protection by needing more than one signature to send a transaction. For example, the wallet comprises 5 people, but we only need 3 to approve a transaction. So, as long as three people are willing to carry out the transaction, it is sufficient. 

Multisig reduces the risk that someone has access to the wallet of one of the people and can control our BTC. It also reduces the risk of loss since if one of the five is lost, there would still be four others who could sign.

14. Update the software you use regularly

The operating system’s software or some tools we use, such as the browser, always receives updates. The ones we are interested in are the security ones. We should always update everything to the latest version to avoid vulnerabilities in the software we do not control. 

We should also be concerned about updating our wallet software with new features and bug fixes that make it more secure. Try to check if developers release new updates before an attacker discovers them and can take advantage of them.

15. Do not forget your password

Do not forget your password. Whether you have written it down or written it somewhere (that’s why the mental wallet is not the most recommended), you have to have access in the future.



  • As the Bitcoin and cryptocurrency industry has grown, so has the interest of attackers in stealing people’s money.
  • Those who are proactive can take steps to protect their digital assets better.
  • One of the best ways to protect our investment is using a secure wallet such as a hardware wallet. However, any cold wallet is always preferable to a warm one.
  • Security experts advise not to have too many cryptocurrencies in exchange accounts.



Ultimately, we are responsible for the security of the bitcoins in our wallets. The cryptocurrency industry is evolving, and systems are becoming more and more secure, so we must take advantage of all these improvements in our profits and funds. 

Don’t forget that if you lose our BTC, there is no way to get them back. There is no support to call to solve the problem. That’s why a proactive attitude is vital before anything else.

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