Is Bitcoin Safe?
All transactions are recorded on the blockchain and are public. While these transactions are not linked directly to your personal information, if someone were to link a public address to you, they could theoretically have the ability to track your bitcoin through the block chain. The more links and public addresses made, to say a merchant, could provide more pieces of your spending history.
One large benefit for bitcoin is the trustless transaction. With a normal credit card, the merchant requires a lot of personal information with the credit card in order to process the payment. The system is designed this way. Not only does the merchant have this data but every third party in between the bank and the merchant in question, and boy does there seem to be nothing but third party financial companies in this world. All of whom want to store big data on their servers. With Bitcoin, no personal information is required and the transaction record is only good for the one time use. This way the merchant does not need to secure data and the transaction does not need to be encrypted. It can literally be transmitted over an unsecured connection without fear of financial or information loss. This is great for a merchant who does not need to invest in expensive website security and great for the consumer worried about the next credit card hacker finding his personal information.
One large benefit for bitcoin is the trustless transaction. With a normal credit card, the merchant requires a lot of personal information with the credit card in order to process the payment. The system is designed this way. Not only does the merchant have this data but every third party in between the bank and the merchant in question, and boy does there seem to be nothing but third party financial companies in this world. All of whom want to store big data on their servers. With Bitcoin, no personal information is required and the transaction record is only good for the one time use. This way the merchant does not need to secure data and the transaction does not need to be encrypted. It can literally be transmitted over an unsecured connection without fear of financial or information loss. This is great for a merchant who does not need to invest in expensive website security and great for the consumer worried about the next credit card hacker finding his personal information.
|
Bitcoin allows anyone to be his/her own bank. This can be good and bad. With bitcoin, possession becomes 10/10ths of the law. And with increased power over money comes increased responsibilities.
Bitcoin private keys are stored on electronic devices. Consider what else is done with those devices or who else has access. In this case money is only as secure as the computer, tablet, and/or phone. However, like computer content, the bitcoin wallet can be backed up, into multiple copies, with multiple locations and stored in multiple forms (Paper, USB, CD). |
|
Functional Backups. Balance the risk of loss with the risk of theft. Backup all bitcoin wallets, hide or secure them well, but don’t go so far as to make it impossible to retrieve them quickly. When making a backup for the first time go through the effort to sweep the bitcoin with the backup to ensure the new method works.
Spread Risk. Holding more than $200-$500 in cash and more than $2000-$5000 in a checking account is not a smart idea. Why should holding similar amounts in a Bitcoin phone wallet and computer wallet be any different.
Two Factor Authentication. Google authentication is another application to help add a strong layer of security to all financial transactions.
Use Offline Storage. Exchanges now offer vault services where they store offline. Alternatively, individuals can also access physical storage such as paper wallets or hardware wallets and store them in a safe.
