How To Keep Your Bitcoin Safe
A Beginner’s Guide to Purchase Cryptocurrencies and Keep Them Safe
Approximately 533 Million USD of cryptocurrencies has been recently stolen from the online exchange “Coincheck”, and other hacker attacks take place every day: it’s probably a good idea to keep your Bitcoin safe. This article explains how you can do so in 4 simple steps.
1. Get a “hard wallet”
Cryptocurrencies like Bitcoin can be kept in “wallets”, most of which are software applications running on your PC or that can be accessed via the Internet. To control and spend your Bitcoin (or any other cryptocurrency) wallet applications keep a long string of characters called “private key” (you can see it as a very long password) stored either on your pc or in an online server. Both these options are not safe as hackers can take control of internet servers or install malware on your pc and “steal” your Bitcoin.
The safest option is to keep your private keys away from the internet, so that hackers cannot steal them. For this reason several companies developed usb-key-like wallets that allow you to store your Bitcoin offline and protect them with strong encryption and a PIN code (so called “hardware wallets” or just “hard wallets”). If you are thinking about purchasing cryptocurrencies, I would strongly recommend to keep them safe in a “hard wallet”.
Two of the most known hard wallets available are the Ledger Nano S and Trezor, you can get one here:
2. Buy Bitcoin, Ether or other cryptocurrencies¹
Today it is quite easy to purchase Bitcoin and other cryptocurrencies online with a credit card or via bank transfer (the latter is way cheaper than the former, if you can wait for your bank to process the payment). The first step is to open an account on popular exchanges that allow you to purchase Bitcoin using the most common national currencies like USD and EUR. One of the most user friendly exchanges is called “Coinbase” where you can get 10$ of free Bitcoin using my invitation link.
You can decide to keep your cryptocurrencies on the exchange where you purchased them, but this means that you let the exchange control your funds and possibly have them exposed to hacker attacks. So it’s definitely safer to move your Bitcoin to an hard wallet that gives you full control on your private keys while keeping them away from hackers.
3. Transfer your Bitcoin to your hard wallet
In order to transfer your Bitcoin from an exchange to your hard wallet you only need two things: the correct address of your hard wallet and the withdrawal function of your exchange. In this article I will cover the transfer process from Coinbase to Ledger Wallet, please write a comment if you’d like me to cover the same process for other hard wallets or exchanges.
After the initial setup of your Ledger Wallet follow these steps to obtain the correct address:
1. Connect your Ledger Wallet to your computer
2. Enter your PIN code
3. Open the Bitcoin application on your Ledger Wallet
4. Launch the Ledger Bitcoin browser extension on your computer
5. Click on “Receive”, a popup window opens
6. Copy the “Bitcoin address” which is displayed
> The Official Ledger Wallet instruction are available here
Now you need to open Coinbase website or application and send the purchased Bitcoin to your Ledger Wallet address:
7. Open Coinbase and navigate to the “Accounts” page
8. Click the “Send” button of your Bitcoin wallet
9. Paste your Ledger Wallet address into the “Recipient” field
10. Select the amount of Bitcoin you would like to transfer
11. Verify that you have copied the correct address as sending cryptocurrencies to the wrong address will result in the loss of your coins
12. Double check you’re sending your coins to the correct address
13. Click “Continue” and then “Confirm”
> The Official Coinbase instructions are available here
If you followed the process correctly your Bitcoins are now being transferred to your Ledger Wallet, you should see a “pending” transaction on your Coinbase account that should be processed within 10-20 minutes max.
You can check the balance of your Ledger Wallet via its application or directly on the blockchain by looking for the Bitcoin address of your Ledger Wallet on blockexplorer.com.
Make sure to pay attention when you copy-paste your hard wallet address to Coinbase to make the transfer, if you mistype the address or you change a single character you can lose the whole transfer amount.
4. Keep it safe
Once you transferred your Bitcoin (or any other cryptocurrency) to your hardware wallet remember to keep it safe, including the 24 words recovery passphrase that would allow you to access your funds in case you forget your PIN or lose your hard wallet. Now that you have your private keys under your control it would be very hard for someone to steal them, however be careful because should you lose them, there is no one that could help you to recover your Bitcoins.
Disclaimer: This article is not intended as investment advice. Cryptocurrencies are risky. Never invest more than you can afford to lose. Always seek professional financial and legal advice before making any investment. Always follow the official instructions of your hard wallet and exchange providers.
Notes:
- Keep in mind that not all hard wallets support all cryptocurrencies, in fact some are quite limited to the most known ones. You can take a look at the cryptocurrencies supported by Ledger Wallet here. The same applies to exchanges, most of them allow you to purchase only a subset of all the available cryptocurrencies.
