Cryptocurrencies Cybersecurity FinTech + Cryptocurrency Guest Post Industries Legal Technologies

A Law Firm’s Guide to Bitcoin Wallets (Just in Case)

By Paul V. Puey, CEO and Co-Founder of Airbitz

A Law Firm’s Guide to Bitcoin Wallets (Just in Case) 26/10/2017
A Law Firm's Guide to Bitcoin Wallets (Just in Case)

Photo Credit: Łukasz Stefański/123RF

Yesterday, an article on Business Insider highlighted the trend of law firms opening Bitcoin wallets preemptively to prepare for the day hackers hold them for cyber ransom.

As we’ve seen time and time again, organizations are hacked, and the criminals demand a ransom, usually payable only in Bitcoin. From large organizations like HBO, which had hackers demand a payment of $6 million in Bitcoin or they would release Game of Thrones episodes, to police departments in small towns – no person or company seems safe from these hacks and ransom demands.

Law firms are no exception. Last year when the Panama Papers story broke, the law firm Mossack Fonseca found themselves at the heart of one of the largest data leaks in history.

Over 11.5 million confidential documents outlining the activity of nearly 220,000 offshore entities anonymously found their way to the hands of the International Consortium of Investigative Journalists (ICIJ). Within days of the release, Prime Ministers were stepping down, and media and public chaos ensued.

This was far from the first time a law firm was hacked.

A few months ago, global law firm DLA Piper was hacked resulting in what brokers said could amount to millions in loses. And just last night, Bermuda-based Appleby revealed some of their data had been breached.

Seeing as this is a trend that's not going away, we’ve put together a guide for what law firms need to know about Bitcoin, wallets, and what to do if/when they get hacked.

What Law Firms (and everyone) Need to Know About Bitcoin Wallets:

Five unique types of Bitcoin wallets are offered today.

Hardware Wallets

These are physical devices that are usually manufactured for the specific purpose of storing digital currencies, i.e., Trezor, Ledger, etc. While these wallets offer secure solutions, they are difficult to use, and in a pinch, make it difficult to use your coins.

Web Wallets

Are cloud-based apps which usually have a company behind them that acts as a custodian of your digital currencies, i.e., Coinbase. Web wallets are a common tool, but there are lots out there so it’s critical to vet them before using.

Desktop Wallets

Downloadable software onto your desktop or laptop that allows you to store and secure your digital currencies, i.e., Armory. Solutions like these depend on the security of your devices, and will require that device to access your wallet.

Konstantin Shaklein/123RF

Mobile Wallets

These exist on your mobile phone which is more secure than most desktops and definitely more convenient, i.e., Airbitz. As more and more people get comfortable with mobile apps, mobile wallets are becoming one of the most popular secure wallet options.

Paper Wallets

This is a way to store your digital currencies as a physical document. The document contains enough information to transact on the network the coins belong to. Be sure you keep track of your wallet anytime you commit it to a hard copy like this.

What Law Firms Need to Know About Bitcoin Storage:

Apart from understanding the different wallet options, it's important to understand the different types of security each provider offers. Generally speaking, there are two core types of wallet providers:

Non-Custodial (Decentralized)

This kind of wallet essentially means you are taking full responsibility for the security of the Bitcoins and will not rely on a third party to secure them for you. This ability to have full control is one of the primary benefits of Bitcoin compared to traditional fiat currencies.

Top Three Decentralized Wallets

Airbitz

Electrum

Breadwallet

Custodial (Centralized)

These wallets can be viewed the same way you view your bank. It's your money, but you have someone else holding onto it for you (hopefully). You are relying on this third party to secure your Bitcoins on their server and could be at risk if their system is compromised.

Top Three Centralized Wallets

Coinbase

Bitgo

Xapo

You’ve Just Been Hacked: Now What

While we all hope the day never comes, if it does, make sure you do your research and due diligence before moving forward. While situations like these may be time sensitive, rash decision making may result in missteps that can be avoided. If you do decide to purchase Bitcoin and store them in a wallet, the process is pretty straightforward.

1. Select your wallet provider:  We can’t specifically say what the best course of action is, but considering the primary options covered in this piece, look for the wallet that meets your needs best.

2. Sign up for an account (ideally one that allows you to instantly buy Bitcoin): This will help you ensure that not only are you able to get the currency in time but also that it’s stored securely without any risk of further security challenges.

Сергей Толмачев/123RF

3. Make your purchase: If you’ve decided to move forward with a Bitcoin purchase and a wallet provider, the process should be pretty simple. If you have any confusion, make sure to reach out to experts who can help guide you through the process.

No one wants to have to deal with security breaches or related challenges, but the good news is there are partners willing and able to help you navigate those challenges along the way. Make sure to keep up with the latest in security technology, while making contingency plans, just in case something happens. Responding with a plan is much better than being caught unaware.

About Paul V. Puey

Paul is CEO and Co-Founder of Airbitz, a company with a vision of delivering privacy and security of digital assets through ease of use and decentralization. Airbitz has won accolades including being one of the top 3 mobile apps for bitcoin in the 2014 Blockchain Awards, being voted the #1 Bitcoin Company by the World Crypto Network, and being voted in the ‘Top 50 FinTech Companies to Watch' by AlwaysOn Inc. As an Electrical Engineering and Computer Science graduate of UC Berkeley, Paul possesses a wide range of technical skills from 3D visual engineering to development of custom web content management systems. He held lead engineering positions with Nvidia Corp and Chromatic Research. Most recently he owned and operated several non-technical small businesses where he implemented solutions to streamline the intersection of people, business, and technology. Paul combines his lifelong technical and business experience to drive Airbitz to be the leading platform for digital currencies.

Comments