At Eurostaff, we wanted to learn just how cryptocurrency is changing the world of tech and finance recruitment across Europe, so we put together this guide on cryptocurrency, where it came from, where it’s going and where it could take your career. Our Head of Corporate Recruitment William Brewer sat down and had a chat with us about bitcoin keys and how to save them. Here is an account of what he had to say below.
The emergence of Bitcoin and other cryptocurrencies have created an alternative way to pay for things, and they come with a variety of advantages. From blockchain allowing everyone to see a list of all finalised transactions to hiding the user’s identity, Bitcoin has provided a transparent payment method that promotes anonymity and isn’t subject to the regulations of a central authority.
However, this anonymity does require users to have two keys, a public one, which allows others to send cryptocurrency to them, and a private one, which allows them to access their funds. While the public one is easily accessible and viewable by everyone, the private key is the one that allows investors to spend their Bitcoin.
While these keys do offer a much more secure way to store and protect Bitcoins, they always present a risk that you could permanently lose access to your cryptocurrency wallet if the private key is lost.
A private key associated with Bitcoin is typically a 256-bit number which can be represented in a variety of ways. For example, it can be represented in a hexadecimal format, which would equate to a 65-character key including numbers from 0-9 and letters from A-F. Bitcoin Wiki provide a sample of what this key could look like.
While most wallets offer a 12, 18 or 24-word backup phrase, there are many documented cases of private keys—and the associated cryptocurrencies—being lost. Earlier in December, the Independent reported that up to 3.79 million Bitcoin had been lost, potentially never to be recovered again. At time of writing, the value of 1 Bitcoin is exceeding £14,000, making the number of lost Bitcoin worth around £53,361,408,890.
However, 1.04 million of the lost Bitcoin is only presumed to be lost as they were originally mined by the creator of Bitcoin and are currently unaccounted for. It remains a possibility that they may be reclaimed by the maker who goes by the pseudonym Satoshi Nakamoto.
There are plenty of examples of early investors losing thousands of Bitcoin over the years. An IT worker from Newport claims to have lost 7,500 Bitcoin back in 2013, when he accidentally threw the hard drive that stored his private key away. At the time, his cryptocurrency was worth over £700,000. Today this amount would have easily been worth over £100m.
With huge profits at stake, knowing how to keep your Bitcoin, the private key and recovery phrase safe is essential. Luckily, for anyone who already has cryptocurrency or is looking to invest in the digital asset, there are simple steps to help keep your cryptocurrency secure.
The first thing to do is back up your wallet. Whether you’ve decided to use hardware or software, most wallets have an industry-standard backup protocol in the form of the previously mentioned back-up phrase. Keeping a paper copy of this phrase in a safe place is essential for if you lose access to your wallet. Most of us have the best intentions when it comes to backing things up, but, in this case, taking a few minutes to do so could literally save you millions.
A further tip is to ensure that you’re not keeping your cryptocurrency on an exchange such as coinbase. Moving any form of digital coin to a wallet you control is one of the most effective ways to look after it. There are plenty of nightmare stories about the exchanges being hacked. For example, mining marketplace NiceHash were targeted by a professional attack which left around $64million stolen.
Disclaimer: While we’re writing about investment into cryptocurrency, we cannot recommend it as an investment opportunity and any money placed into the digital asset is done so of the investors own choice.