Bitcoin is a highly valuable asset, but its potential for growth also attracts scammers. Many people mistakenly believe that Bitcoin is easy to lose, and as a result, they fall victim to scams. One recent message I received highlights this concern:
“I tried Bitcoin and lost over £96,000—my entire life savings!”
It’s really sad to hear stories like this. However, they are based on a complete mis-understanding about what Bitcoin is, and how to store it securely. So I have written a guide to the 3 key concepts which, if followed, mean that no one can ever steal your Bitcoin.
A Beginners Guide to How to Secure Your Bitcoin
Holding Bitcoin is the absolute safest and most secure way of holding money that has ever existed.
Indeed, the Bitcoin network has NEVER been hacked.
Thats because its mathamatically impossible to do so, which is how the system was designed to work.
To keep this guide “KISS” (Keep It Simple, Stupid!) I won’t go in to why its mathamatically impossible, but if you’re interested in this you can check out this link.
Because Bitcoin is so valuable, and its understood by many that it will go up in value “forever” against other assets, there are MANY so called “Bitcoin scams”.
Indeed, I get calls and emails every week pushing ever more “sophisticated” scams to steal my Bitcoin.
However, the good news is that if you have a very basic understanding of some fundamental concepts about Bitcoin, these scams are effortless to avoid and CAN NOT steal your Bitcoin.
So far, we have explored the prevalence of Bitcoin scams, a murky undercurrent that threatens those who do not know the fundamentals. You have a critical need to have a firm understanding of the fundamental principles of Bitcoin in order to effectively safeguard your digital assets.
But understanding alone isn’t enough. To truly protect what’s yours, you need actionable strategies. In the upcoming section, we’ll unravel the three golden rules that form an unshakable defense against theft. These principles, if adhered to meticulously, ensure that your Bitcoin remains untouchable—no matter how sophisticated the threat.
1. You MUST self custody your Bitcoin
The first and most important rule for securing Bitcoin is “self-custody.” This means that you should never keep your Bitcoin on an exchange. If you keep your Bitcoin on an exchange, it is not your Bitcoin!
Of course, you’ll probably have to buy your Bitcoin on an exchange. But the important thing is to withdraw it to a wallet you control — a “self custody wallet” as soon as you’ve bought it.
If you don’t control your own Bitcoin — in other words if it isn’t stored in a wallet that you control — it is not yours! You mearly have a “claim” on it.
And if some rougue actor such as an employee of the exchange, a criminal gang who extort someone at the exchange, or a rougue government manage to co-opt the exchange where “your” Bitcoin is stored, it will be gone.
An even bigger risk is that the exchange is not fully reserved and doesn’t even hold the Bitcoin they say they do in the first place. When there is a “run” on the exhange, you will be left without some or all of “your” Bitcoin.
If you don’t want to use an exchange at all (which entails some “headache” usually of dealing with your Bank, proving your identity etc), you could consider the Member Buying Service we offer.
We’ll also advise you on which wallet to choose and how to set it up (which is actually very easy to do).
2. Keep your Private Key and Recovery Seed Phrase securely
Your Private Key is the what allows you, in combination with your “Public” Key to move and spend your Bitcoin.
This is done automatically by your wallet so is nowhere near as complicated as it sounds 🙂
Your Recovery Seed Phrase is the human readable version of this Private / Public Key pair.
If someone has your Recovery Seed Phrase, they can control (i.e. steal) your Bitcoin!
So it must, must, MUST, be stored securely.
I don’t want to complicate this article by explaining exactly why your Private Key and Recovery Seed Phrase are so secure (if kept securely of course) becuase this is a beginners article. If you’re interested you can sead up on that here.
3. Never, never, never, never, *EVER* enter your Private Key or Recovery Seed Phrase online!
Under no circumstances should you ever enter your Private Key or Seed Phrase online.
There are no exceptions.
If you do this, you WILL loose your Bitcoin.
There are lots of very convincing scams that persuade new Bitcoiners to do this, for example:
Lets say you use the exchange Coinbase to buy and — god forbid — to store your Bitcoin.
Coinbase send you an email saying:
“We have discovered a critical security vulnerability. We have a sophisticated hacker attacking our system and your Bitcoin is at risk.
Please URGENTLY go to our website at this link and enter your Seed Phrase. You will then be able to move your Bitcoin to a secure Vault.
Time is of the essence – it’s essential you act now to secure the threat against your Bitcoin”.
You may also receive a phone call from an American or British sounding employee of Coinbase, which makes you think that this must be legitimate.
If you don’t know this hard, non-negotiable rule (NEVER enter your private key or seed phrase online) you may, out of fear, do exactly what the attacker asks.
And you will loose your Bitcoin.
If you buy Bitcoin, memorise these 3 key rules and you will be safe.
And the most important rule of all:
If you are ever in any doubt about what you are doing, STOP and ask someone you trust who knows more than you do about the subject.
If you have no Bitcoin expert to ask, ask me and I’ll be happy to take a look.
I may not be able to reply immediately but if you have any doubt, or if you think there is an exception to the above 3 rules, freeze and ask for a second opinion.
Once you internalise the 3 golden rules above, you can sleep soundly at night knowing that your Bitcoin is secure.
