Last updated on January 2nd, 2018 at 12:00 am
Storing bitcoins has become a major cause of concern. Moreover, when you store bitcoins in an online wallet, exchange, or in a HYIP(High Yield Investment Program), you never know what is going to happen to them. There have been many instances of so called crypto currency services that have vanished with a lot of bitcoins.
In some instances, major Bitcoin services have been hacked. The first ever Bitcoin hack was recorded in 2011 when a user “Allinvain” from bitcointalk.org was hacked and he lost 25,000 bitcoins which were valued at roughly $500,000 at that time and presently, they are worth 5.75 million dollars. Another example is of Mt. Gox, which was one of the most highly used exchanged back when it existed. The exchange was hacked in 2011, which resulted in the loss of around 2000 bitcoins, and the exchange was offline for many days. All of this calls for strong security measures to be implemented and today, you will be given an insight into various security measures.
The first and foremost thing is cyber insureance. Currently, Xapo and Coinbase have been insured. Coinbase is insured by Aon, which is one of the worlds leading insurance services, whereas Xapo has been insured by Meredian Insurance. Cyber insurance can be a breakthrough for security, because of its features and security. This can also help in expanding the user base, as cyber insurance for Bitcoin will guarantee users their funds if they are stolen. For example, Coinbase has been insured, and it has a staggering 2.1 million users.
This insurance is one of a kind with the company being insured for many types of hacks and compromises such as internal theft, loss of funds due to a software bug, glitch, bitcoins stored on servers etc. But they do not refund users if they havent implemented adequate security measures, such as 2 factor authentication, or if the users account has been compromised due to negligence.
In simple terms, offline wallets are safe from online vulnerabilities, such as remote administration trojans, malware, viruses and keyloggers. There are many types of offline wallets such as paper wallets, hardware wallets, etc. Coinbase holds 98% of all its funds offline in vaults located all over the world. The backups are diversified into paper backups, USB backups. For an added security measure, they are even encrypted. For a handful of users, cold storage wallets might be a tad too difficult to handle,
Xapo has some unique, and seemingly bulletproof security measures implemented. The company earlier used to charge a 0.12% fee for the amount stored in their vaults and they recently waived the fee making the service completely free. Moreover, Xapo is now using a satellite from Satellogic to store vital information/data which makes it very secure as normally, nobody can go and hack the satellite. In addition to this, Xapo has multi signature facility which further strengthens the security.
Bitcoin Wallet With Multi Signature
There are many different methods to execute bitcoin transactions safely, but multi-signature technology is by far one of the best, and safest, ways to execute transactions. In a wallet with multi signature, there are a given set of private keys, and a certain number of those keys need to be signed in order for the transaction to be executed. This is very helpful as, if a hacker gains access to your bitcoin wallet, signs your key and initiates a transaction for the bitcoins in your wallet to be sent to himself, as there are still a certain amount of keys that need to be signed, or else the transaction will not be executed. Thanks to this, even in the situation mentioned here, your bitcoins remain safe and secure.