How to Safely Store and Use Bitcoin?

Since being introduced to the world by the pseudonymous developer Satoshi Nakamoto in January 2009, Bitcoin has become the foundation on which the rest of the cryptocurrency market has been built. The apex digital asset has driven growth for blockchain technology and has become the most visible, valuable, and widely adopted cryptocurrency in the world.

Today, Bitcoin is used by people for various purposes, from being adopted as legal tender in some countries for everyday transactions to depositing funds at online casinos and sports betting websites, and from being accumulated as a corporate treasury asset to providing crypto market exposure to retail and institutional investors through exchange-traded products (ETPs).

Bitcoin’s value lies in its privacy, cryptographic security, and the development of wallets that are designed to ensure safe and secure transactions on a global scale. The introduction of various products and services has made it more convenient for those who are new to the market, but on the other hand, increased adoption has led to heightened risk of hacks and thefts.

This blog helps you understand how to store and use your Bitcoin safely. So, without further ado, let’s get started.

How To Use Bitcoin Online?

The first step before buying and using BTC is to set up a wallet in which you can store it. Here is a guide to getting started with Bitcoin and using it online:

1. Create a Wallet:

Pick a reputable wallet to store your Bitcoin. You will be provided with a public key, which serves as your account number, for receiving funds, and a private key, acting as a password, for authorizing transactions. The public key is used to encrypt information, while the private key is used to decrypt the information. 

There are hot and cold wallets available, where the former is always connected to the internet, making them convenient for frequent transactions, while cold wallets are physical USB drive-like devices that are kept offline, making them ideal for long-term storage.

2. Buy Bitcoin on an Exchange:

The next step is to purchase Bitcoin. This can be done via crypto exchanges like Binance, Coinbase, Kraken, and others. Create an account and buy BTC using stablecoins, other cryptocurrencies, or via wire transfer and credit/debit cards. 

The bitcoins you buy are stored in the exchange wallet connected to your account, which can then be transferred to your self-custody hot or cold wallet. Several countries now have Bitcoin ATMs, allowing investors to buy BTC at the counter with cash.

3. Find a Vendor that Accepts Bitcoin:

A growing number of online merchants and other services now accept Bitcoin and other cryptocurrencies. Once you have found the right vendor, you can connect your wallet to the platform and buy goods or services with BTC. It is recommended that you only transfer the amount you want to use for the transaction to the wallet that is used for general purposes, and keep the remaining in safe storage, preferably a cold wallet.

4. Send Bitcoin to Others:

You can also send Bitcoins to other crypto wallets, similar to traditional bank transfers. The key difference is that BTC transactions are peer-to-peer, remaining independent of banks. Ask for the recipient’s public key (wallet address) to transfer funds directly to their accounts.

How To Safely Store Your Bitcoin?

The Bitcoin you buy is recorded, stored, validated, and encrypted on the blockchain, which is the safest ledgering system in the world, with no known events of assets being stolen by altering information. This is largely due to the cryptographic encryption methods used by blockchains. It is said that hacking a blockchain network would take centuries with existing tools.

However, the wallets you use to store your Bitcoins are generally software-based, which makes them susceptible to vulnerabilities, thus becoming the only weak link between the blockchain and the end user. Here are the key wallet types and best practices you need to be aware of for safely storing your BTC:

Hot Wallets:

These are digital wallets that are connected to the internet via mobile or web applications. They are best suited for frequent transactions and are the most widely used for accessing and transacting in Bitcoin. However, they are vulnerable to cyber threats and can be hacked.

Cold Wallets:

Cold wallets, also known as hardware wallets, are offline storage solutions that are not connected to the internet unless necessary. They are ideal for long-term holdings and are far less at risk of being compromised.

Seed Phrase:

When you set up a Bitcoin and crypto wallet, you will receive a seed phrase, which is a collection of 12 or 24 words that allows you to access your funds in case you forget the password to your wallet. It is essential to safeguard your seed phrase and refrain from storing it online. The most recommended method is to write them down on a sheet of paper and store it in a safe place.

Final Thoughts

Bitcoin offers a revolutionary way to conduct financial transactions in a decentralized and secure manner, emphasizing user control, privacy, and a simplified transfer process without the involvement of an intermediary. As the crypto market continues to grow in use cases and adoption, it is more necessary than ever to use and store your digital assets safely.

The rising popularity of cryptocurrencies has resulted in online and offline vendors accepting them as payment methods. While hot wallets are the most convenient for daily transactions, cold wallets are recommended for safe storage.

By following the best practices we have mentioned in this article, you can protect your Bitcoin and crypto assets and enjoy the benefits this transformational financial technology has brought to the world.