Bitcoin has been around for a while and proved valuable and reliable for investors in the long term, especially after withstanding significant changes following previous halvings and bear markets. This is why, currently, Bitcoin is an investor’s preferred crypto coin that puts the base of a portfolio due to high accessibility, transparency and security. 

Bitcoin has a multi-layered security system, considering how hashing, mining and block confirmations were introduced as ways to safeguard the blockchain. These methods have made it impossible for hackers to steal Bitcoin from people’s wallets, but that doesn’t mean there are no ways for individuals to acquire them illicitly. 

According to Binance, Bitcoin’s price is volatile, meaning its lows and highs can sometimes be decisive. Hence, there are ways to get Bitcoin at its peak and make millions through malware, info steals and social engineering schemes. These cyberattacks are difficult to forecast and thwart, but having the right type of wallet and being wary of threats can secure your assets. Here’s how. 

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Types of crypto wallets

Once you purchase Bitcoin, you’re provided with a public key used for its creation and a private key to access your coins. However, the private key is stored in your wallet, so choosing the correct type is paramount.

There are plenty of wallet types available. Here’s a brief explanation of their usage and features:

  • Custodial wallets are provided by third parties, like exchanges, that manage your private key’s security sometimes through insurance. Typically, they’re not considered safe due to being an easy target for hackers;
  • Non-custodial wallets are available to use without a company’s involvement, so you have complete control over them. This means you are responsible for securing your private key to avoid losing access to your assets;

Hot and cold wallets

Wallets can also be hot and cold, even if they’re custodial or non-custodial. Hot wallets are accessed online, whereas cold ones aren’t connected to the internet. Both have pros and cons to consider, but usually, it’s believed that cold wallets are safer as they’re not exposed to online networks.

Hot wallets are more convenient as you only need to log in and make the transaction in the same place, but they’re riskier since they store the private key on a device connected to the internet. Hot wallets are usually unregulated and don’t ensure the ownership of your wallet and assets, so you can never be sure of their safety.

On the other hand, cold wallets don’t work through an internet connection. There are three types of cold wallets. Paper wallets are simple pieces of paper where you write or print the private key and QR code for the wallet address. As safe as they are, paper wallets can be easily damaged or lost. There are also sound wallets where you put the private key on a CD or a flash drive. Still, they can be pretty impractical.

The safest cold wallet is the hardware one, where you use a physical device that includes a computer chip for storing and a particular operating system for private keys. Additionally, a hardware wallet provides an interface for blockchain interactions so you can sign transactions offline so you’re protected from threats.

Supplementary things to do for enhanced security

While a cold hardware wallet is the best choice for storing Bitcoin, this is not enough to ensure safety. The truth is that you can never be 100% safe with online transactions and activities, but there are ways to minimize the chances of being a hacker’s target.

First, you must research reputable exchanges, businesses and wallets based on ratings, ease of use and customer support. When it comes to safety, it’s advised to work with the best on the market. However, you must also be cautious with the crypto projects you invest in and check their audits or what others say about them.

Other essential safety elements to have included:

  • Setting up an anti-phishing feature;
  • API key restrictions;
  • Updating your operating systems regularly;

These methods will add an extra layer of safety when interacting with crypto businesses or exchanges.

Diversify your portfolio for advanced safety

Another not-worthy tip to safeguard your portfolio is diversifying it, meaning expanding your assets besides Bitcoin. Typically, all investors know that having Bitcoin is imperative for a profitable portfolio. Still, considering its volatility, it can all go down when the market crashes and Bitcoin’s prices decline considerably.

Diversifying involves researching remarkable crypto projects that have proven a certain level of assurance in the long term so they can create a safety net. For example, if your primary investment is Bitcoin, consider allocating additional resources to Ethereum, Solana or XRP because they’ve demonstrated innovation and value over the years.

Ethereum has an impressive blockchain behind it, where developers can create NFTs, dApps, DAOs, and so much more through smart contracts. Solana is considered the sustainable version of Ethereum since it has low fees and increased scalability. Finally, XRP is considerably energy-efficient, and its value is expected to boom in the future.

However, you must be prepared to withstand market crashes and volatility because they can affect your portfolio regardless of diversification and safety measures. That’s why massive allocation is advised, but only with long-term projects that provide unique features. 

Understanding how cryptocurrencies influence one another is also essential because altcoins are linked with Bitcoin’s price, but sometimes the altcoin season settles, meaning Bitcoin is declining in investors’ preferences. Therefore, you must constantly adjust your investments and be prepared for any sudden changes in the crypto market.

Final considerations

Investing in Bitcoin has become pretty straightforward today ―you invest your funds to buy it and then sell it according to market movements. You also need a reliable wallet because if it gets hacked or you forget the private key, you can never reaccess the funds. Hence, understanding how hot and cold wallets work and choosing one that suits your plans for the future or level of investments is crucial to making sustainable income and safety navigating the crypto ecosystem.