With the world becoming techno savvy including financial transactions and holding of such assets, it is imperative that users of digital wallets know the risks that lie inherent. It is indeed a complex world where there are instances of ransomware as well as hacking that happen every day for the most secure server systems. Hence, consumers who use crypto wallets need to exercise certain best practices when it comes to using such wallets in a secure manner.
1. Underlying technology
When you are using crypto currency you need to be assured of the inherent safety and security mechanisms that are employed. For instance, Bitcoin has gained popularity as a safe and secure digital currency due to the Blockchain technology that backs it with irreversible transaction records being generated in a distributed ledger format.
2. Knowing inherent risks
When you are using a digital wallet, you need to understand the inherent security risks that exist by reading through reviews of such services.
3. Choosing the right wallet service
Often it is not the crypto currency you transact with but the digital wallet service provider and the technology they provide to guarantee security of such transactions. Hence, it is important that you choose a reliable wallet service for digital currency transactions.
4. Importance of key addresses
Even if crypto currency guarantees anonymity of the users, you have provided a personal key that contains personal information. Hackers who access a wallet service can gain such information which might prove damaging to your financial security.
5. Reliability of a wallet service
Most wallets collect information about their customers and the transactions they perform. While this is unavoidable, you can ensure that the wallet service you sign up for having the best practices in the industry and a great track record for maintaining a secure environment for their customers.
6. Check terms and conditions
Every wallet service usually tracks the online activities that their users do. They have access to search history, web activities and emails of the users. Check the terms and conditions of a wallet service to know what you are agreeing to in order to stay informed.
7. Check security measures used
Before you sign up for a wallet service, be assured of the security measures that the wallet service undertakes. Many have superior encryption technology by which they protect the keys that they issue to their customers.
8. Different services and rewards programs
Not only should you check the security aspects of a wallet service before signing up, but check different features they provide. Some have a reward incentive scheme that rewards consumers who have increased activities through such platform.
9. Check reviews on independent platforms
In order to determine which wallet service is dependable you can check the different reviews. It would be wise to log onto an expert and independent platform whereby you can find reviews of the different features of wallet services and gain an idea as to which wallet service would be best for the kind of transactions you have in mind.
10. Separating funds
It is necessary that one has accounts on two digital wallet services at least. One can separate wallets as per the kind of transactions they undergo to spread out the crypto funds one gains or uses.
11. Cold storage
It is important that one separates out their savings and store them securely in a wallet that could be termed as a cold storage wallet.
12. Storing keys
When it comes to storing your private keys, ensure that you store them in a safe offline place that would be a wallet account as well. It would be well advised to break up a private key into several parts and store them in a safe manner and away from each other.
13. Wi-Fi security
It is important that you use a secure connection to log onto your digital wallet. Often use of public or open Wi-Fi networks can prove to be risky, especially if you use them to conduct online financial transactions.
14. Privacy of your wallet devices
Ensure that you protect your wallet devices by not leaving it unattended or do not lend the device to anyone. This is a necessity when using hardware wallets.
15. Safety while servicing
If you have a digital wallet that needs servicing, remove funds from the same before you get the servicing done. It would be wise to also change wallets at an interval of a few months.
16. Guard against phishing
Phishing scams often arise in web mail accounts. Hence, if you have received an email from your wallet company ensures that you have checked for the authenticity of the email before you choose to transact through the links provided.
17. Auto updates not required
If you transact with digital wallets and such apps, then you should not keep the auto update feature on. This can lead to unstable apps which can lead to losses as well for the account holders.
18. Two factor authentication
Some wallet services often have the two factor authentication feature. Such a feature helps to safeguard your login access to a digital wallet service. It makes it impossible for hackers to gain access to such accounts.
19. Check transaction addresses
This is another risky aspect that you need to safeguard against. Check the transaction address that you are sending a transaction to.
20. Do not use copy and paste function
In order to ensure that payments are sent to the right address, check manually and do not use the copy and paste function.
21. Check web locks
When you use a web wallet, check for the SSL mark that stands for security of the site.
22. Ensure web browser security
If you are using a personal desktop or laptop, ensure that you have a reliable web browser security application that safeguards your movements on the web.
23. Use a strong password
This is important when you are creating an account. It is important that you choose to have a strong password that has alphanumeric characters as well as special characters.
24. Check for white-listed sites
Helpful reviews will showcase dependable wallet services.
25. Check wallet reviews every few months
As the performance of wallet services change over time, check status through reviews.
26. Usage of paper wallets
This helps you maintain offline data of your private and public key for transactions.
27. Use hardware wallets
You can supplement your digital wallet with a hardware version.
28. Sign up for exchanges with caution
This is imperative as exchanges can also expose customer wallet information.
29. Encrypt wallet apps
If you are using a wallet app, encrypt it and protect with a password.
30. Backup wallet
Take measures to backup transactions and records of your funds in alternate locations.
The annual increase rate of Bitcoin and other cryptocurrencies
Until late 2016, the rate at which retailers were prepared to accept Bitcoin and other digital coins as a method of payment was increasing rapidly, albeit from a very low base. However, that trend has recently reversed and, for the first time in its history, the number of transactions lodged on the Bitcoin network has decreased this year, compared to last.
At the same time, major ecommerce sites like the gaming platform Steam have decided to discontinue the use of Bitcoin on its platform.
On the other hand, countries like Japan and South Korea are embracing Bitcoin, with an increasing number of stores and merchants ready to accept them as a method of payment.
Are there any consistent patterns to derive from this?
It is useful at this point to draw a distinction between Bitcoin and the other cryptocurrencies that are accepted by online merchants, primarily Litecoin and Ethereum, as there are specific factors that are making Bitcoin unattractive to retailers.
One factor is the extreme volatility of the currency. Currently Bitcoin has been trading around the US $17,000 a coin level, up from US $1,000 at the start of the year. More strikingly, the value has increased more than 300% in the past 6 weeks alone. This could be absorbed if the increase was strictly linear. However, in practice, the value of Bitcoin can vary by several hundred dollars a day, making the setting of prices in digital currency extremely difficult for retailers.
An associated factor is increased transaction fees. As the number of Bitcoin transaction traded has increased, competition has increased amongst users to get their transactions confirmed. Miners now charge premium prices to allow transactions to be prioritised for inclusion in a block. As a result, transaction fees have increased from less than a cent to more than US $20 each.
This is one of the reasons cited by Steam when it announced recently its decision to stop accepting Bitcoin, explaining that gamers bear the cost of these fees, and the degree to which these fees fluctuate made it increasingly difficult to calculate the cost of a game when paying for it with the digital currency.
Steam, however, is not closing the door on Bitcoin altogether, stating that it would reconsider the option of using the cryptocurrency as a method of payment when it gains more stability.
They are not the only company that has stepped away from Bitcoin in recent months. In August 2017, Morgan Stanley published a report that showed that 0.6% of the top 500 online retailers now accept Bitcoin, down from 1% in 2016, with the names of those who were prepared to accept them as a method of payment including the likes of Ocerstock.com, PayPal and Shopify.
What would, undoubtedly, be a game changer would be if one of the major online retailers like Amazon or Alibaba were to decide to accept payment in digital currency. Certainly there were plenty of rumours that Amazon was ready to hit the button several months ago, and strong inferences were drawn when the ecommerce giant acquired 3 cryptocurrency domain names, with suggestions that it was preparing to launch its own digital currency. However, it is known that Amazon CEO Jeff Bezos is a Bitcoin sceptic, and currently there are no signs that the company is prepared to accept Bitcoin on their site any time soon.
At the same time there are pockets of good news for Bitcoin. In Japan, for example, the acceptance of Bitcoin as an approved method of payment has seen the number of retailers which will receive the digital coin increase from 4,500 t0 260,000, assisted by the development of an in-store app. Meanwhile, in neighbouring South Korea, the numbers of merchants which will accept Bitcoin is set to increase sharply.
Other cryptocurrencies like LiteCoin and Ethereum are accepted by some merchants, although, to date, the level of take-up is less than that with Bitcoin, which has a comparatively longer history. Australian IT solution provider Ellenet and New York-based eGifter currently accept Litecoin, for example, whilst tech giants like Microsoft, Cisco and Intel all accept Ethereum.
In fact, these digital currencies are, theoretically at least, more attractive to merchants than Bitcoin as they are more stable in price, and have much lower transaction fees.
Unfortunately for them, all the noise is about Bitcoin at present, which tends to obscure the benefits that these alternative currencies may offer as a method of payment. Whilst there are encouraging signs in the Far East, many online retailers are now shying away from Bitcoin as a means of payment because of its price volatility and high transaction fees.
Almost certainly we need a period of stability before major retailers and ecommerce sites are going to accept, in any significant numbers, Bitcoin or other cryptocurrencies as a method of payment. Once that occurs, and a major company like Amazon can be persuaded to take the plunge, then we can expect digital currencies to be a widely accepted payment means for millions.
Can forks help Bitcoin reach its true destination?
Recently a debate has raged amongst the crypto-community as to what Bitcoin is really meant to be? Is it a peer-to-peer electronic cash system or, alternatively, is it more of a new, speculative, asset class? There is no common consensus, and, as the future direction of the cryptocurrency remains unclear, even as its traded value continues to hit record heights, there is an emerging view that forks might help the digital currency back on the road to its true destination.
There are a number of strands to this debate that need to be unpicked.
One issue that has characterised Bitcoin from its inception is lack of clarity as to its long-term vision. When Satoshi Nakamoto and “his” team of developer created Bitcoin in 2009 it was hailed as a completely new innovation, the world’s first decentralised currency and payment system. But Nakamoto left the project in 2010, and, like a band of disciples abandoned by their prophet, the Bitcoin development and wider crypto-community have been left to interpret the vision and how best to implement it.
Inevitably, this has led to division and even schism as competing views on the way forward have emerged. There are also technical issues relating to compatibility of new versions of the code which have been introduced, similar, for example, to when Microsoft introduces a new version of its software. This has led to the creation of forks, which have caused the value of Bitcoin to surge wildly on occasions.
As with all cryptocurrencies, Bitcoin uses computer generated code to create digital money. And, just like any computer program, the code needs to be changed and updated on a regular basis to help the currency develop. However, when updating the code it is very important to ensure that it is compatible with older versions of the system; otherwise the blockchain will not work properly, and will not accept both old and new coins.
This results in accidental forks, where there are differing versions of the software which, in turn, create competing versions of the ledger. In these instances, as with any code, the developer or programmer needs to eliminate the bugs and bring the different versions of the blockchain into line.
The other type of fork is more ideological in nature. Known as a hard fork, it occurs when the developers of a cryptocurrency decide that a fundamental change needs to be made to the programming of the code that will deliberately create incompatibilities between older and new versions. When such changes are made, everybody using the coin must be prepared to update all their applications in order to use that coin type correctly.
The problem with Bitcoin is that there is no consensus as to what changes to the code should be made, if any. There is a core group, for example, who believe that the core code is essentially immutable, and to make fundamental changes to it undermines the whole ethos of the original idea. There are others though, who point to the flaws as to how Bitcoin operates in practice, and argue that, in order to fulfil Nakamoto’s vision, it is necessary to adapt the code to meet the challenges of the real world.
These include the key issue of scalability. When Bitcoin was used for thousands of transactions a day, the network could cope. But as the number of daily transactions increased to the millions, the current limitations of the network became exposed, with current capacity limited to 250,000 transactions a day. The result have seen transaction times become increasingly unreliable, with users waiting hours, or even days, in some cases for transactions to be confirmed. At the same time, transaction fees have sky-rocketed, from fractions of a cent to nearly US $20. At a stroke then two of the original virtues of Bitcoin – fast transactions conducted with minimal transaction fees – have been compromised.
The results of this have been tangible, with many early retail adopters of the digital currency choosing to abandon Bitcoin for other altcoins or reverting to traditional methods of payment. For the first time in its history, the number of transactions on the Bitcoin network is dropping.
In response to this there have been several hard forks of Bitcoin, with the creation of Bitcoin Cash and SegWit (Segregated Witness). Both versions attempt to address the scalability of Bitcoin by increasing the transaction capacity through increasing the block size, with Bitcoin Cash the more radical of the two as it offers 8 MB as opposed to the original 1 MB.
However, neither of the forks has gained mainstream acceptance amongst the wider community – Bitcoin Cash currently trades at less than a tenth of the value of original Bitcoin, whilst the latest version of SegWit – SegWit2X – currently is valued around the US $200 a coin level.
This is not to dismiss the concept of forks per se. Forks can be a good thing if they improve the stability and structure of a coin and if, in the case of Bitcoin, then can create the mechanism which will truly allow it to become the peer-to-peer decentralised global digital currency system which its original proponents intended.
However, the fundamental problem with Bitcoin is that there is a lack of consensus amongst developers and the wider crypto-community as to what the true destination of the currency is, and how to get there. Until this debate can be resolved, it may be difficult for any fork, and resulting code change, to gain the necessary degree of acceptance and adherence to become the majority view, and not one just supported by an ardent minority.
Learn About Bitcoin POS Systems
Bitcoin crypto-currency came into existence about five years ago and about 11 million Bitcoins are in circulation currently. Though many people in the world over are using this currency for peer-to-peer transactions, it has not gained popularity in the area of business transactions. This is mainly because there are very few businesses which accept Bitcoin as a currency payment and people are not aware what to buy with Bitcoins. If more businesses are ready to accept this digital currency, more and more people will start mining it and spending it for their various purchase needs.
There are many services which offer various point-of-sale solutions for merchants to accept Bitcoin payments. Whether you are having a brick and mortar store for business or whether you are having an online business, you will be able to use the Bitcoin POS systems. Bitcoin transactions make account keeping simple for small businesses. Your customers will be able to pay without using computers, tablets or other hardware. These POS terminals work like the terminals used for accepting conventional credit- card payments. You will be able to convert the Bitcoins into cash and deliver to your bank account instantly using the right type of POS systems.
The features preferred
Any POS system for Bitcoin transaction for your business need should have some necessary features such as
• Bitcoin transactions without using any hardware
• Accessible through Wi-Fi or GSM, which allows it to be used in any location you want
• Quality QR code reader with laser technology, which allows it to scan the Bitcoin addresses
• A receipt printer which allows easy printing of QR codes on receipts
• Accepting and issuing specific debit cards
• Accepting payments from different Bitcoin wallet hosts
• Allowing the buying and selling of Bitcoins at retail price
• Printing invoices
What makes POS systems a better option?
Many people will find it difficult to accept the use of POS systems when they can use the phone or tablet to make purchases. However, some of the Bitcoin POS terminals offered by different companies give better shopping experience.
• Transactions are completed faster
• The receipt printer integrated with the terminal allows the buyer and seller to have proof of transaction instantly
• They are simple to use or operate by your staff
• It is a secure and fast mode of payment
• These specialized machines are less preferred by thieves
• Moreover, the terminals are cheaper than the computer or tablets
Who can use Bitcoin POS system?
Bitcoin POS systems will be a great addition for any retail business if Bitcoins are accepted in their country. Coffee shops, hotels, and any other small or big business outlets can use this system. Even e-commerce sites can incorporate Bitcoin payment processor in their website.
As a buyer, you should know where to buy Bitcoins and how to use it for making payments in retail shops and restaurants. When you buy with Bitcoin using POS terminals you will be able to save transaction charges unlike the credit card transactions.