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Bitcoin and blockchain expert Andreas M. Antonopoulos is laying out the three worst ways anyone could store their Bitcoin.
Antonopoulos says there are a number of easily avoidable mistakes that are guaranteed to make investors lose their BTC.
“I would say the absolute worst practice to store Bitcoin is, to store it on a custodial service, meaning they have the keys and you do not, that is accessed primarily through a web interface, and does not have two-factor authentication. I would put that at the absolute top of my list as the worst ever way to store Bitcoin.
If you store Bitcoin on a custodial service, you don’t have the keys. And it’s accessed through a web interface, which means that you have to type a username and password into a browser, which may or may not be at the correct site, which may or may not be on a computer with a key logger, or a Trojan.
And there’s no opportunity for two-factor authentication, or, the two-factor authentication is laughingly simple, like SMS-based text message two-factor authentication, which at this point in the internet security history it is criminally negligent, to have SMS as your two-factor authentication, which is why it’s preferred by all of the banks.”
Antonopoulos says the mistake people make in storing their Bitcoin is storing them in non-custodial wallets. These services typically allow users to access their keys, but remain vulnerable to phishing attacks.
“The second worst would be non-custodial, no two-factor authentication, web-based [wallets]… where, again, phishing attacks are the primary way that that wallet is stolen. And it happens so, so often. So again, that’s a very bad idea. You need to add two-factor authentication, or preferably move your coins somewhere else.”
The last terrible place to store BTC, says Antonopolous, is on a desktop application.
“[The] third-worst practice to store Bitcoin is on a very poorly-secured desktop computer using some kind of desktop application, in a hot wallet with very little in terms of password. But even if you have a password, if it’s on a desktop operating system, like I dunno, Windows 7 that hasn’t been patched in years. And, even if you have a password, it can easily be sniffed by a Trojan or a key logger that’s installed on that computer.
And so, when you have an operating system like that, the question is not, ‘Do I have a virus?’, but ‘How many and what varieties of viruses do I have, and how much of my information are they currently leaking?’ So, that would be my third worst option.”
But it’s not all doom and gloom, says Antonopoulos – there are still secure ways to store Bitcoin.
“So for example, mobile device applications, hot wallets on mobile devices, where you control the keys with a mnemonic, generally pretty robust, because the mobile operating system is robust.
And then we start getting into hardware wallets, and various forms of cold storage, multi-sig wallets.”
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Featured Image: Shutterstock/Tithi Luadthong