As the world’s preeminent digital bearer asset, owning Bitcoin comes with a different set of security risks than owning traditional assets.
I recently conducted a straw poll that asked “What is the biggest threat to your Bitcoin?” The poll received more than 1,600 votes, and though it is far from scientific, it’s an interesting glimpse into how Bitcoiners assess security threats.
It’s estimated that about 4 million Bitcoin have been lost, nearly a fifth of all the Bitcoin that will ever exist.
Today, some of that risk has been mitigated with technology, such as metal seed storage devices and multisignature functionality.
Digital theft is a continuously evolving threat in Bitcoin security, and it underscores the importance of self-custody.
Today, improved cold storage practices by large custodians have shifted the threat of digital attacks to individual account holders.
In the same way, it’s dangerous to go around flashing cash publicly, it’s a bad idea to talk about your Bitcoin.
As for social engineering: don’t trust, verify.
At this point, government response is a mostly theoretical attack vector, unless you’re a political dissident or operating outside the bounds of your local laws.
Make no mistake: government action is a threat worth considering, especially from a historical point of view.
This threat could be a higher priority in the future because if it happens someday, many people will be affected unlike other individualized threats.
How to prepare: If a government were to take action against Bitcoin, they would first need to determine who has it.
When Bitcoin is on the rise, it makes headlines in the media, which grab criminals’ attention.
A physical attacker’s payday isn’t very high from the average person, so physical attacks are often premeditated to ensure the target is high value.
If you believe in Bitcoin as a long-term store of value, develop an inheritance plan even if you plan to live for a long time.
As you evaluate your own unique security risk, try to stay conscious of all threats, not just one.