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Freshman Tutorial Serial Part 2 :Safe use Bitcoin Wallet

2014-9-11 13:43 | admin

Roundup:Abstract: You may use the bitcoin wallets, but you may don't know how to safely use the bitcoin wallets. During my time as moderator of the freshman column, Dreamcolor bitcoin web site, I often be ask ...

Abstract: You may use the bitcoin wallets, but you may don't know how to safely use the bitcoin wallets. During my time as moderator of the freshman column, Dreamcolor bitcoin web site, I often be asked for help, wallet is lost, bitcoin is stolen, or password is forgotten, etc.. 
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You may use the bitcoin wallets, but you may don't know how to safely use the bitcoin wallets. During my time as moderator of the freshman column, Dreamcolor bitcoin web site, I often be asked for help, wallet is lost, bitcoin is stolen, or password is forgotten, etc.. But I would like say, base on properties of bitcoin, no one others but you, must take all responsibility for your own bitcoins. Only you can take charge of responsible for your own wallet. So, please learn how to safe your bitcoin wallets. This is the premise of everything.

Otherwise, please stay away from the bitcoin currency, not to say try to become a miner. On the safe use of the currency wallet, there are many ways. But you'll find out more safe, more trouble. Therefore, the focus of this article is try to find a balance between the security and easy.

We all know that the bitcoin currency is decentralized, which almost bitcoin fans like this advantages when they talking about it. In fact, decentralized also has its obvious shortcoming. Since there is no center, so that everyone must be responsible for their own. The so-called responsible for their own means; if your bitcoin wallet or bitcoin been stolen, you did never get it back. Besides that you bear all the consequences silently,  no one else will be responsible it for you.

Case:
In the use of central bank accounts, I don't have to worry about the forgot password. This happened to me several times. Whether forgot the e-banking password, or just forgot the bank card password, no worry, just take the my ID card to the bank to reset the password. However, if you forget your bitcoin wallet password, it will lost forever. Such a case our forum can occur from time to time. Citing the two:

(1) In March 14th, forum friend whose ID tatata00 posted and said;  Forget Blockchain's wallet password, so that 7 coins can not be pick out. Blockchain, who has said it very clear in their website: Forgotten password will not be restored. (Becuse that they do not have your password at all )

This is a typical lose of the forgot password. Bitcoin has a limited total quantity. So if someone lost the wallet, or lost password, the total money number is reduced. That is say;  the other bitcoins owens will have more value becuse of it is more rare.

(2) In April 1st, forum friend ID jjkk posted and said; Bitcoins wallet with 10 coins has been stolen. He published the transfer address.
This is a typical case of that wallet is been stolen. All bitcoins in his wallet has disappeared. So the thief must stolen wallet file with its password.

From the first day of your play the game, you must understand that each of us faces security problems. So we must know how to master the safety use of wallet.

The basic concept:
Before the introduction of the safe use of the purse, we first need to understand some basic concepts. In this section we will introduce the content includes: The bitcoin wallet address and the private key, wallet file and password. If you already have an understanding of these concepts, you could skip this section.

(1) Bitcoin wallet address and its private key.
Suppose that we have a locked mailbox, the postman can put the letter into it. However, if you want to take the letters out from the box, you must use a key to open the mailbox.

In the case of using bitcoin wallet, which the address is the wallet address, which wallet private password is the key, and bitcoin is as same as letters. It is worth to noting: First, bitcoin wallets address and the private key is one for one correspondence. Namely, the key can only open the mailbox. No more. Second, the private key can be used to calculate the wallet address, but not vice versa. The wallet address is public. If one get a private key, one get the the mailbox too.

Bitcoin wallet address looks just like this: 1JwSSubhmg6iPtRjtyqhUYYH7bZg3Lfy1T。
When we use bitcoins wallet we can directly see the address, but where is the private key in ? The private key is a string of like such

word:
5KJvsngHeMpm884wtkJNzQGaCErckhHJBGFsvd3VyK5qMZXj3hS
If you are using a local bitcoin wallet, this key hide in your wallet file, which is invisible; If you use online wallet such as Blockchain, the private key is in the site's wallet file. In such a case, specific how to find out an address of the corresponding private key, please check related articles. In short, what you need to know is, the private key is stored in the wallet file, if the wallet file lost, private key lost, money is lost; If the purse file been stolen, the private key may leak, bitcoin currency may be stolen.

(2) the wallet file and its password
Now just think; Our house have 10 mailbox, then we have 10 keys. For safety, we put the 10 keys in a drawer, and we lock the drawer.
You guessed it. The drawer is the wallet file; The locker is the wallet file password. Please noting: first, the locker can be changed, namely the wallet password can be modified; second, never mind drawer lost , as long as you had backup your mailbox keys, you can still open the mailbox; third, the lost drawer is not too big, as long as if the thieves can not open the drawer.

In short, what you need to know is, the wallet is a container for save the private key data. The reason of why we using wallet file, because for most people, the private key data is difficult to understand and hard to backup; and to back up multiple private key is very complicated; but it is much easy to backup a wallet file.

Save mode:
After understanding the above concept, let us have a look of three basic methods to store bitcoins.
(1) Cold storage: has the highest safety. It save bitcoins by method of off-line preservation, which generated bitcoin address and private key in an off-line computer. For example: you can install wallet client in an off-line computer, generates an address, and then send bitcoin into this address. The address and its corresponding private key never appeared on the Internet. So it is the most secure method. How to query the currency balances in this address? Just go to the Blockchain.info search the money.

However, this approach is very inconvenient to user. If you need to use the coins in the wallet, you either need to import the private key into an online computer, or need to use U disk copy wallet files. After that, because the private key has already been used in the online computer, so the remaining money also needs to be sent to another address which is in the cold storage.

(2) The local wallet: High security, this is the most common way to use bitcoin wallet. The money stored in an online computer bitcoins wallet. Namely, in an online computer, install the wallet client, generated address, for receiving and transmitting the currency. It is more convenient. It can be used in one fixed computer, or you can copy files to another computer (which is not recommended).

(3) Online Wallet: Has moderate level of security. Such as online Blockchain wallet. It is convenient for user, that registration is simple, that can be used anywhere in the network, that can also be used in a mobile phone.

To make a long story short, usability and security are mutually exclusive. Method is more safe, is more inconvenient; Wallet is more easy, more unsafe. So, for local wallet, multibit client is recommended, and for online using, Blockchain wallet is recommended too.

The strategy for user:
Now we understand the easy and the safety is a pair of contradiction, we can make a purse strategy:
(1) Do not put all eggs in one basket. I use all three methods to store my bitcoins: cold storage 80%; local wallet 15%; online wallet 5%. Cold storage is equivalent to the bank CD, which do not need in short time and its amount is large. So the most important is that to ensure the safety of it. Local wallet; which equivalent to bank savings, are occasionally used, not at larger amount. In order to increase its safety, only use it at one of home computer; Online wallet equivalent to carry cash, that amount is small, even lost cann't make one feel too bad.

(2) Must be backed up, but not more than three copies for each wallet. One cold storage is in a off-line computer, two are in the U disk.  My dear and me keep the key, in case of preventing my accident; Local wallet is in a online computer, it is in a mobile hard disk (this is because I have weekly computer data backup to disk, so the way to backup the purse); Online wallet has the private key in print peper which save in the home (to prevent I suddenly dementia, forget password, or Blockchain collapse).

(3) To cultivat good computer usage. This is the most important. Do not download on the Internet without care, do not goto these rather baffling web site. If you must do, change another computer. In addition, cautious about some copycat coins, because some of them has client that itself is a Trojan horse.

Finally, what I want to emphasize is, no way is 100% absolute safety. Even in cold storage, if house on fire, money is still lose. A bank account is not like the same, if lost card, you can go to the bank for replacement. So, to play the bitcoin safity, responsible for themselves, of course. It is means freedom, but is also means that the risk. Learn how to safe use of bitcoins wallet can minimize the risk, avoiding unnecessary losses.

End 

Translated from:http://www.cybtc.com/article-826-1.html

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