Bitcoins, Security and Mt. Gox

Probably the biggest news in the bitcoin world this year has been the collapse of Mt. Gox, one of the largest Bitcoin trading platforms. Due to being hacked the company was unable to fulfil it’s obligations and had to file for bankruptcy in Tokyo and New York. There are also rumours of fraud within the company.

Collectively the collapse and media coverage contributed to a fall in the bitcoin price, not to mention investors losing valuable bitcoin holdings. Mt. Gox CEO Mark Karpeles admitted that the company lost around 750,000 of its customers’ bitcoins.

Mt. Gox CEO Mark Karpeles with commemorative bitcoin

Mt. Gox CEO Mark Karpeles

So with security uppermost in the collective conscience of the virtual currency community what can we do to secure investments and protect against hacking independently.

Firstly do some research on your chosen trading platform. Find out who owns it, where it is based and what kind of customer service is offered. Coinbase and Cryptsy are large established platforms.

Passwords

We’ve all seen the google stats on the most widely used passwords. Yes ‘password’ is still used by thousands of hapless punters!! Your password should be at least 12 characters containing a variety of upper and lower case letters and random symbols. Avoid using common dictionary words and if possible don’t write your passwords down. Also avoid using the same password for multiple logins. If you get hacked the consequences will be even more dire. Your own email password should be similarly complex.

Two-Factor Authentication (2FA)

This involves not only having a password but also mobile phone authorisation (via code) when you log in. It’s a simple process of installing the Google Authenticator app (Authy) and making sure you have your smartphone to hand when you log in.

Protect your PC or Mac

Always password protect your computer and make sure your wifi connection is secure and protected using WPA2 or stronger encryption. Never download files that you haven’t explicitly requested and avoid visiting ‘sketchy’ sites. Always use Anti-Virus software. Passive products like Malware Bytes are very good.

Coin Wallet

If you store a local version of your wallet, always encrypt it with a secure passphrase and remember to regularly back it up locally and in a secure cloud storage area. Don’t forget your passphrase or your coins will be lost for ever if you should forget it.

These are the bare minimum basics of the security measures you should take. Situations like Mt. Gox are hard to take precautions against, but a common sense approach to storing large amounts of coins should be taken. Spread your assets if possible and keep a regular eye on the blogs and news pages for any current issues.

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