5 Tips to Keep your Coins Safe

in #bitcoin8 years ago

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These 5 tips will help you keep your coins: bitcoin,steem, other to be kept safe from scammers and thieves. This is a followup article from here, but focusing on coins specifically:
https://steemit.com/security/@freddy008/5-tips-to-avoid-hackers-and-viruses

1) Cold storage / Hardware wallet

It is very adviseable if you keep 90% of your money in a safe cold storage, non networked PC or dedicated hardware wallet. The hardware wallets you can buy online, it costs 15-100$ depending on what brand you choose (I will review them later), and are easy to setup, and give pretty decent security compared to a casual an online PC.

A dedicated cold storage PC is optimal, where you choose the parts you build from, and not trust a 3rd party to build it for you. Of course the parts could still be vulnerable, but the overall risk is low. I bet most conscious exchanges (not bitfinex) do build their cold storage on their own. Even the Winklevoss brothers mentioned on their interveiw that they store their exchange's funds on a customized self-built multisig cold wallet.

The remaining 10% will be your hot wallet, that should still be kept safe, but for this a good online wallet with 2FA is pretty much enough. Whenever you run out of money, you move some cold funds to the hot, and when you save money you move from hot to cold.

2) Phishing

It is a common practice for theft and its hard to detect, for example the popular https://blockchain.info website had a phishing counterpart when they exchanged the "L" letter to "i", which becomes hard to detect, they cloned the website, and every person that went there from google, got their money stolen.

Also not to mention many phishing sites were advertised on google, so if you were searching for your wallet site on google, good change was that google sent you to a phishing one.

This is why you keep bookmarks of important websites and always verify the certificate of the website!

3) Ponzi schemes

Bitcoin is full of "doublers" and "earn 15% interest daily on your deposit" type of ponzi schemes. It's just better to avoid these. Rule of thumb: if the % return is too much, it's a scam! Anything over 30% yearly, should raise flags.

Then you have the cloud mining schemes where the person claims that he will buy miners with your investment and give you the profits. It sounds too good to be true, and some cloud miners are legit, but 90% are scam. Even if they are not scam, they are probably losing money so there is no reason to invest in them. Why risk it?

4) Malicious Altcoins

You might hold 1000 BTC on your PC, and you see a promising altcoin on bitcointalk, you download the wallet, soon to find out that your 1000 BTC got stolen. Yes, and I am not joking , many people were robbed by this method. Most altcoins are either scams, or their developer is a hacker trying to pull stunts like these off.

Not to mention even if the altcoins are legit, sometimes the dev posts the wallets on a 3rd party where an unaffiliated hacker can just edit the wallet and upload a hacked one.

It is crazy, and many people got robbed because they downloaded virused wallets. So be careful what you download, especially if the altcoin is in it's very early stages.

5) Malicious Nodes

Whatever cryptocurreny you may use, if you want to control is fully, you have to be a node, so you download the blockchain from other people. However the blockchain is a distributed trust system, which doesn't mean that all actors can be trusted.

There are many malicious nodes, that DDOS people and slow down the network. Modern clients have ban features where you can ban malicious nodes, but the risk is still there.

If you run an online business that requires a self-hosted node, then a practical DDOS attack can cost you a lot of money and missed profits. So having an adequate firewall amongst other preventions is recommended. Also have a list of banned nodes that others have made, it's usually the same hackers that do these , and the IP addresses are already well known.

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Excellent post, I would suggest this to anyone who is just beginning to learn about cryptocurrency.

So, would you say it is better to stick with the most popular altcoins?

Yes but don't trust them blindly either. Virus scan any wallet before downloading. If they offer PGP verification or checksum, verify them.

If you want to play around with new altcoins, do it on a virtual machine / virtualized enviroment where the malware is isolated.

Good stuff. Can you provide some examples?

Examples for what?