September 10, 2025

By Roshan Aslam

Value addition and unprecedented financial gains — these are the two key aspects that have contributed to making Bitcoin one of the world’s best-performing assets. However, while the positive aspects of BTC are undeniable, its rise into prominence is being hampered by the simultaneous rise of digital fraudulent activities and cyberattacks. In the last few years, several large-scale cyberattacks on Bitcoin exchanges have made it clear that Bitcoin is becoming vulnerable to malicious attempts by fraudsters, highlighting the need to take appropriate steps to ensure robust Bitcoin wallet security. While a large number of investors are allocating bandwidth in their larger investment portfolios to Bitcoin, a gap in their knowledge regarding ensuring ample wallet security is leading them to be victimised.

Large cyberattacks on globally prominent exchanges, both in India and overseas, emphasise the significance of Bitcoin wallet security in 2025. However, this will require an in-depth knowledge of how Bitcoin security works, which wallets are appropriate according to diverse needs, intimate knowledge of the recovery phase, implementing digital security habits and most importantly — staying informed. Recent reports suggest that more than $2.17 billion has been stolen in 2025 in terms of VDAs (Virtual Digital Assets like Bitcoin), which amounts to more than the entirety of the previous year. Furthermore, reports from blockchain analysis firms have also revealed that approximately 24% of all stolen fund activity in 2025 has targeted personal wallets. These aspects further bolster the bid to strengthen security practices in Bitcoin wallets in 2025.

Deciding on appropriate wallets

To secure their Bitcoin investments, retail users must begin by understanding their requirements and finalising the right wallets for themselves. This is primarily because wallets can be of two types — Cold Wallets and Hot Wallets. The Cold Wallets, also known as Hardware Wallets, are basically physical devices like hard disk drives or SSDs that store the private keys to the Bitcoin assets offline. These are best used for long-term storage for a considerable amount of Bitcoin investments, and their offline nature makes them the most secure options. Since they are not connected to the web, they remain immune to cyberattacks or malware.

However, on the other hand, Hot Wallets are basically software that are connected to the internet and can be a desktop, mobile or any other application. For Bitcoin users who undertake daily transactions of limited amounts of BTC, these types of wallets remain convenient for them. However, since they are connected to the web, they remain at risk for cyberattacks.

Users must understand their own requirements before deciding in favour of any particular wallets. By finalising an appropriate wallet type, it is possible to reduce the chances of cyberattacks on their Bitcoin wallet, essentially bolstering security significantly.

Securing the recovery phase

The recovery phase, also popularly called the Seed Phrase, is essentially the master key for the Bitcoin holdings. Whoever controls the master key, or the recovery phase, is capable of controlling funds at will. This is why it becomes highly important to secure the recovery phase for retail investors. To begin with, it is imperative that the recovery phase is not stored on a digital device connected to the web, such as computers, phones, or cloud servers. Securing it with a physical copy is the safest option. Additionally, it is smart to store the recovery phase in multiple secure locations, as creating backups, or several different copies to be stored in different safe locations, helps to propagate wallet safety. It is also important to consider that taking a digital photo, or screenshots, essentially poses a major safety violation that can lead to exposing the Bitcoin holding to breaches. Users must avoid undertaking such activities to secure their wallets to the best of their abilities.

Establishing robust digital security habits

Cyberattacks come in all shapes and forms, and online habits of users are one of the major components of becoming victims of them. This is why it’s important to create robust digital security habits by enabling two-factor authentication for all wallets, particularly on exchanges and custodial wallets. 2FA via authentication applications are considered safer than OTP based 2FA.

Furthermore, users must use strong and unique passcodes that are complex in nature and cannot be guessed easily. Many users are prone to using their names, date of birth, or other personal information related to them as passcodes, but using a password that is unique can be the differentiator in terms of security. To remember the passwords, a password manager application can be used, or users can also save it in an offline mode.

It is also important to become vigilant against emails that look suspicious, or social media messages and websites that contain doubtful links. Clicking on unverified links often leads to phishing scams, an aspect that can severely reduce the overall security apparatus. Additionally, it is recommended to verify the wallet addresses before making a transaction. This is because Bitcoin transactions are irreversible, and mistakes can lead to considerable losses. It is also recommended to update the software of the wallet, as well as the operating system of the device, as the updates consist of security patches that enhance the security of the Bitcoin wallets.

About the author:

The author is the CEO & Co-founder of GoSats.