Staying Private and Secured On The Bitcoin Network
Bitcoin users can be very private on the Bitcoin network if they diligently adhere to Bitcoin's privacy principles, privacy is one area Bitcoin excels compared to traditional payment systems, on a decentralized, peer to peer, public network like Bitcoin, user privacy is dependent on how the user the interact with the bitcoin network.
Privacy is not easy for newcomers, most will trade-off privacy and true ownership of their bitcoins for simplicity by signing up on centralized exchanges which require KYC information, such platforms tag your addresses to your identity which completely blows off users' privacy because transactions can be easily traced back to the user, thereby also exposing the identity of people who transacted with that user easily.
NOTE: If you don’t have access to your bitcoin private keys, then you are not the true owner of those bitcoins.
A few months ago Binance was top of the trend list on Twitter, the trend was due to some Nigerian users complaining about their frozen accounts on Binance they could no longer access their funds because they don’t have total control of their digital currencies (cryptocurrencies), such a scenario was what Bitcoin was built to fight against giving everyone absolute control over their funds, but so many bitcoin users are not benefiting from private and secured nature of Bitcoin mostly because they are not so knowledgable about Bitcoin, or some just prefer the simplicity of centralized exchanges.
These are some privacy and security tips, that can help in keeping users private and more secure while transacting on the Bitcoin network.
User Privacy Best Practices
- Avoid address reuse as much as possible (when a user reuses addresses, bitcoin transactions can easily be linked to them and their identity can be easily revealed)
- Use coinjoin (coinjoin is a method by which multiple bitcoin users combine to make a bitcoin transaction)
- Use multiple wallets (cold and hot wallets, hot wallets are wallets hosted on the internet and could be vulnerable to online attacks, while a cold wallet is a wallet not connected to the internet)
User Security Best Practices
- Use decentralized and non-custodial wallets (custodial wallets are wallets that don’t give users access to their private keys, while noncustodial wallets are the reverse), users who do not have access to their private keys are not the true owners of the bitcoins in their wallet, so it’s a bad security practice to have large sums on custodial wallets.
- Use hardware wallets (a hardware wallet is a form of cold storage that stores a user’s private keys, they are safer than other types of wallets because they are offline, and are built solely for authorizing transactions and keeping private keys safe.) an example of a hardware wallet is trezor
- Diversify risk (Putting all ur bitcoins in a single wallet is not a safe thing to do, in case of theft or hacking, or any other unprecedented situation that leads to you not having access to that wallet it means all your bitcoins will be lost forever, it is safer to have your bitcoin on multiple wallets)
- Use multi signatures (If a company or an individual has a large number of bitcoins multisig will help secure the bitcoin by requiring more than one signatory to make a payment)
Bitcoin’s decentralization comes with a lot of responsibilities for Bitcoin users, users can be very private while transacting on the bitcoin network, but users can only be private when they transact with Bitcoin’s privacy best practices in mind.