Tips & tricks

1. Bitcoin is an experiment: Teach yourself

Bitcoin is still in its infancy, make yourself aware of all opportunities and all risks. Inform yourself and choose a good Bitcoin wallet (digital wallet) to store your bitcoins. We have a short “Start with Bitcoin” manual for when you are completely new.

2. Remember: Bitcoin is NOT anonymous

Contrary to what you may have heard, Bitcoin is not anonymous. Bitcoin addresses are not linked to a person, but the Bitcoin transactions are completely transparent and traceable. You can therefore better see Bitcoin as a pseudo-anonymous. Apart from the fact that you shouldn’t do anything illegal at all, I certainly wouldn’t use Bitcoin with it.

3. The Bitcoin exchange rate can fluctuate violently, keep that in mind.

4. Do not invest money that you cannot miss

We already know this rule from the stock exchange, but the scope remains the same. Do not assume that Bitcoin will make you guaranteed rich and you also realize that you can lose all your money.

5. Choose a good Bitcoin wallet

Storing your Bitcoins securely is something that you need to think carefully about. Choose a good hardware wallet.

6. Use different and complex passwords.

Many of us choose out of pure convenience to use the same (often simple) password for multiple sites. Hackers, however, can easily crack or guess easy passwords and a password can also be stolen, etc. In turn, all your accounts can be opened by the culprit with all the misery that entails. Therefore, use a unique and complex password for each account. Use any password management software such as keepass to securely store all your passwords.

7. Make backups!

Back up your bitcoins regularly. Multibit and Bitcoin-core both have the option available to make an encrypted backup of your wallet. Do this on a regular basis. Again: you will not be the first (or the last) to find out one day that all his bitcoins are gone.

8. Watch out with online Bitcoin wallets

Online bitcoin wallets are easy to use but they also pose a risk. The online service can go bankrupt or be hacked and then there is a good chance that you will never see all your bitcoins again. The history of Bitcoin is littered with examples of this with MTgox as the most dramatic example. Preferably use the online service as a change and save most of your bitcoins on a hardware wallet or a secure computer with Bitcoin-core or Multibit software. This of course combined with a good password and backups.

9. Check your addresses

If you want to send or receive bitcoin, always check the bitcoin address carefully. Bitcoin payments are irreversible so bitcoins sent to or received at the wrong address can be considered lost. Some software or online services also give you the option to determine the amount of the transaction costs yourself, pay attention to this too!

10. Consider the tax authorities

As Bitcoin becomes more accepted, government agencies also become involved. For example, you now have to state all of your digital money in the annual tax return and it will probably not end there. So keep good accounts and assume that the tax authorities or another government agency will sooner or later make themselves heard.

Image: Cointelegraph