Keeping Your Bitcoin Safe, The Art of Hodling

0

Hodl; a verb coined by the online Bitcoin community, meaning “to hold out for life”.

Those who have managed to hold onto their Bitcoin during the roller coaster of its price swings are known as hodlers. As the price of Bitcoin has skyrocketed again this week, gently hitting an all-time high, the issue of the safety of your funds can suddenly seem quite urgent. So how do you hodl safely?

While everyone who has bought Bitcoin during the lows of the past few months will celebrate the skyrocketing increase in their net worth, Bitcoiners recognize that holding the reins of their own finances comes with their own responsibilities.

So you’ve bought Bitcoin and it’s on an exchange or in a wallet on your phone. You watch the value of your investment accumulate. After that ?

The main threat to the security of your funds is hacking. There have been, alas, a number of attacks on Bitcoin exchanges. Probably the most infamous story in Bitcoin history is that of Mt Gox, in the early days of Bitcoin innovation. In 2011, Mt Gox announced that it had been hacked and that around 850,000 Bitcoins had been stolen. No longer disappeared as a result of fraudulent transactions. Over the years some of that money was recovered, but the early Bitcoiners were badly burned in this episode and the lesson he taught has been etched in Bitcoin’s collective memory: the Internet, are, by definition. , potentially vulnerable to attack.

The second your Bitcoin holdings start to generate real value, you will need to take steps to increase your security, essentially creating your own bitcoin ‘keys’ and practicing with them over and over again until you are ready. be comfortable with key management.

This is done in two stages. First of all, it’s good to be aware of your general online safety. If, for example, your account on Bitstamp is linked to a Gmail email address and your password is your dog’s name associated with your mom’s birthday, you are an easy target for attackers. Using an encrypted e-mail address, for example those provided free of charge by the Swiss company Protonmail (www.protonmail.com) already increases your security. It is also crucial to pay attention to the security of your password. Password managers like NordPass (http://nordpass.com) or Dashlane (www.dashlane.com) provide excellent service, often free or at very low cost. Not only do they keep your passwords and are encrypted, but they can also generate passwords for you, a jumbled series of letters, numbers and symbols, impossible to guess and very difficult to remember, even if the evil eyes. saw it.

Second, it’s worth taking your Bitcoin offline. To do this, you need to buy a hardware wallet. Perhaps the best known brands are Coldcard and Trezor. Admittedly, we get lost here a bit in geek territory, but I promise you that these objects are user-friendly!

If you are investing in a hardware wallet, and I highly recommend that you do so as soon as your investment starts to look like what you consider to be a decent amount of money (e.g. the amount you could use to buy a car), You will need to go through the process of setting up your device, tap on receive and transfer your funds to the Bitcoin address your device displays. Setting up your device requires that you take note of a list of words generated by it. These words are random but combining them in the correct order will give you access to the funds on this device. These words are known as your private keys and give rise to the Bitcoin saying: “not your keys, not your Bitcoin”. That is, if you don’t have your Bitcoin in a hardware wallet and you are not in possession of these words, you cannot really consider yourself full ownership. Keeping your money in a hardware wallet ensures its security and most importantly ensures that you own it – as safe as if Bitcoin were gold and you store it under your mattress. Always test your keys, deleting and restoring your wallet before transferring a substantial amount to it.

So… this can all sound complicated and more than a little intimidating. But when you consider the benefits that Bitcoin brings, there’s no doubt that taking financial responsibility for your own funds, removing them from the traditionally greedy (and not too clean) hands of banks, is worth it and very liberating. For the first time in history since the creation of banks, we can transact internationally, peer-to-peer, without depending on financial third parties and without anyone being able to censor us or seize our assets. If you want, you can sell your home for Bitcoin without the hassle, hindrances and delays of bank approvals, fluctuating exchange rates and mortgage inflation, and more. A company exporting Portuguese goods could receive payment within minutes from anywhere in the world without a money transfer service reducing big fees. By combining these lightning-fast, global, cheap and unfettered financial services with a degree of financial sovereignty unprecedented in the history of money since the introduction of banks, it is no wonder that more and more more of us are choosing to hodl, and no wonder we’ve seen this price skyrocket. At the average appreciation in the value of Bitcoin, 10% of the disposable income invested will yield a full equivalent of 100% of the disposable income in just 3 years, over and over again. The trick is to hodl and basically never sell.

As of this writing, a Bitcoin is worth around $ 53,000, up 440% last year. This price increase gives the absence of capital gains tax on Bitcoin in Portugal additional importance for Bitcoiner expatriates there – such as capital gains and / or wealth. Bitcoin tax for this calendar year is expected to be substantial elsewhere.


Source link

Share.

Leave A Reply