Knowing you have some BTC in your Bitcoin wallet can be a great feeling. Whether it’s there for long-term investment or for you to trade with, you at least know you have some monetary asset aside from your cash at hand and cash at the bank.
Now, just like with using any gadget or software, there are some things you should look out for while using your Bitcoin wallet. The obvious reason for this is to keep everything running smoothly. Think of it like this: you’ve got an expensive new gadget, and you don’t want to accidentally break it. I’m here to help you avoid those accidental ‘breaks’ when it comes to your Bitcoin wallet.
In this article, I’ll show you 7 common mistakes that people often make with their Bitcoin wallets, and how you can easily avoid them. So, let’s get into it and make sure your BTC stays safe and sound.
7 Common Mistakes to Avoid when Using Bitcoin Wallets
People make a lot of mistakes that can be easily avoided when using their Bitcoin wallets. I’ll be discussing seven of them with you.
- Skipping basic crypto knowledge
Imagine getting a new BTC wallet and wanting to go straight into trading without knowing how it works. That’s writing an exam without reading the instructions. Some people enter the crypto world with almost zero knowledge about how wallets work or the basics of transactions.
Skipping this step can lead to mistakes. Just like you wouldn’t drive a car without learning how to, you shouldn’t use a Bitcoin wallet without understanding its fundamentals. You might make errors in transactions, like not considering fees or sending to the wrong address.
The fix is simple; take a little time to learn about your Bitcoin wallet. Some wallets have tutorials that show you what is what and how to make the best use of your Bitcoin wallet, watch them. Know how public and private keys work, understand the concept of transaction fees, and how confirmations work.
By gaining this basic knowledge about your wallet, you’re setting yourself up for successful and error-free experiences with your Bitcoin wallet.
2. Using weak passwords
Your password is your Bitcoin wallet’s first line of protection, so you can’t afford to have it weak. Using passwords like your name or birthday or an easily guessable word like ‘password’ is basically leaving your front door open. When you use a weak password for your Bitcoin wallet, you make it prone to hacking. Hackers have tools that can crack weak passwords in a matter of seconds.
The stronger your Bitcoin wallet password is, the less likely it is to get hacked. Asides from hacking, someone that knows you might try to go behind your back and access your wallet. Such a person can easily guess your password if it’s weak. That’s why you also shouldn’t use a password you’ve used on another site as your BTC wallet password.
A strong password should have uppercase and lowercase letters, symbols, and numbers. Even if the Bitcoin wallet you use has the best security features, a weak password still makes it susceptible to threats.
3. Not safeguarding your private key
When it comes to the cryptocurrency world, you’ll hear the word ‘keys’ or the phrase ‘private keys’ a lot. Why? Your private keys are very important when it comes to keeping your BTC and BTC wallet safe.
A private key is a unique cryptographic code that allows you to control and access the funds associated with a specific crypto wallet address. In this case, it allows you to control and access the funds in your Bitcoin wallet.
Your private key is a highly sensitive piece of information and it should be kept safe and secret at all times. You should also never share it with anyone, they’re private for a reason. If someone else gets their hands on it, they can access your BTC wallet without your permission, and potentially move your funds.
Whether it’s a physical piece of paper, hardware, or a digital file, safeguard your private key like your life depends on it. You can keep a physical copy in a secure location, like a safe or a hidden spot only you know about.
4. Using custodial wallets
One mistake some people make when selecting a Bitcoin wallet for use is picking a custodial wallet. A custodial wallet is a type of cryptocurrency wallet where a third party, usually the wallet service provider, takes care of your private keys and security on your behalf. In other words, they manage your wallet for you.
Now, in case you didn’t know, crypto’s golden rule is “Not your keys, not your coins”. What this means is that if you don’t have direct access to the private keys of your cryptocurrency wallet, you don’t have full ownership and control over your coins. It is important to have control over your private keys to maintain the ownership and security of your coins.
Using a custodial Bitcoin wallet to store your BTC totally goes against the golden rule and means that you’re not in total control of your BTC. There are security risks associated with using custodial wallets or leaving your BTC on exchanges where you’re essentially relying on third parties to manage and secure your funds.
When you trust a third party with your private keys, you’re sacrificing control over your cryptocurrencies. It’s advisable to opt for a non-custodial wallet that allows you to have full control and ownership of your private keys.
5. Not confirming transaction details
A lot of crypto users can be impatient sometimes, and this makes them skip rechecking some transaction details. The thing with cryptocurrency and blockchain technology is that transactions are immutable. This means that once a transaction has been recorded on the blockchain, it becomes extremely difficult, if not impossible, to alter, delete, or tamper with it.
If you don’t confirm every transaction detail before going ahead with it, there might be nothing you can do if you make a mistake. You should confirm the amount of BTC you want to send, confirm the network and confirm the recipient’s wallet address before authorizing a transaction.
If any of the information above is wrong, your Bitcoin can get lost or sent to the wrong address, and you might never be able to retrieve it. So, why not be patient and take the extra seconds or minutes to double-check every detail before making a wrong move that you may regret?
6. Forgetting passwords or Recovery Phrase
As I mentioned earlier, you shouldn’t use weak passwords for your Bitcoin wallet. But that doesn’t mean you should make the mistake of creating a strong password that you will forget. When you create your password, store it somewhere safe online and offline, so that you can always go back to it in case you forget it.
Crypto wallets don’t have the ‘forgot password’ option and that means you may not be able to access your Bitcoin wallet if you forget your password. However, if you have your recovery phrase, you can restore your wallet’s backup.
Let’s talk about recovery phrases. A recovery phrase or seed phrase is a sequence of words (usually 12 or 24) that serves as a backup for your wallet. It would be used to generate the private key associated with your BTC wallet, granting you access to it. Recovery phrases are important, so you should keep them safe, and never lose them.
To avoid losing your recovery phrase, write it down on a piece of paper and make multiple copies of it. Store these copies in different secure locations where nobody can access them. Having multiple copies reduces the chances of forgetting where you kept it.
7. Using Public Wi-Fi
Public Wi-Fi networks are convenient and save costs, but they’re also a hunting ground for cybercriminals. When you access your BTC wallet on public Wi-Fi, you’re potentially exposing sensitive information to prying eyes. If you want to make a transaction on your Bitcoin wallet and you’re connected to a public wifi network, you should disconnect from it first.
Hackers can access data on open networks and that can put your BTC wallet’s security at risk. Stick to trusted networks or use a Virtual Private Network (VPN) to encrypt your connection and keep your transactions private. A lot of people have had their wallets hacked and lost their funds because they accessed it on a public Wi-Fi network. I’m sure you wouldn’t want that to be you.
Tips for Managing Your Bitcoin Wallet
Here are some additional tips to help you effectively manage your wallet:
- Stay Vigilant Against Malicious Attempts: Watch out for suspicious emails, messages, and websites aiming to steal your Bitcoin. Verify links before you click on them to avoid getting hacked.
- Conduct Thorough Research: Research wallet apps before using them to ensure they’re reputable and secure. Go for crypto wallets that you can count on like Coinosh. This wallet has robust security features and a friendly user interface.
- Enable Two-Factor Authentication (2FA): Add an extra layer of security to your Bitcoin wallet with 2FA. This security feature requires you to provide a secondary verification method, like a code from your phone, in addition to your password. This makes it even harder for anyone to use your BTC wallet without your permission.
- Consider an Additional Hardware Wallet: For an added layer of security, you should consider investing in a hardware wallet. These physical devices store your private keys offline, making them virtually immune to online attacks.
- Regularly Update Your App: Wallet developers often release updates to fix bugs and enhance security. Keep your crypto wallet app up to date to benefit from the latest security improvements and wallet features.
Frequently Asked Questions about Bitcoin Wallet
- What is a Bitcoin Wallet?
A Bitcoin wallet is a digital wallet that lets you store, send, and receive Bitcoins. It is a virtual wallet for managing your BTC.
2. How can I create a Bitcoin Wallet?
Creating a Bitcoin wallet is easy especially when you have a reliable wallet provider like Coinosh. Download the app, sign up, and follow the prompts to generate your Bitcoin wallet address.
3. Which Bitcoin Wallet is the best?
The best Bitcoin wallet for you depends on your needs. Your best bet for a Bitcoin wallet is Coinosh. It is user-friendly for beginners and has great security features.
With Coinosh, you get to store, manage, buy, and sell your BTC seamlessly, making it an excellent option for both newbies and experienced crypto traders.
4. How does a Bitcoin Wallet work?
Bitcoin wallets can send and receive BTC by using cryptographic key pairs. A key pair consists of a private key and a public key that corresponds to it.
To send Bitcoin, private keys that must be kept secret are used. While receiving Bitcoin requires using a public key that can be shared with anyone.
Conclusion
Using your Bitcoin wallet can seem like something very easy, but using it safely involves keeping some things in mind. Now you know some common mistakes people make when using their Bitcoin wallet and how you can avoid them.
By avoiding these mistakes, you’re not only safeguarding your assets but also ensuring you have a smooth experience with your Bitcoin wallet. Also, don’t forget to apply the extra tips mentioned, a little knowledge can go a long way in keeping your wallet secure.