How to Store Bitcoins As Securely As Possible
It seems that every few months we hear essentially the same story about a man who bought a bunch of bitcoins but lost access to them after the cryptocurrency became really valuable. The latest from Engadget follows a reporter who managed to save $ 200,000 in Bitcoin after a trip to Hong Kong and a lot of luck.
So if you’re just getting started with bitcoin, you’re probably worried about making sure it’s safe and secure, and if you’ve held bitcoins for years, you might want to update your storage setup. Here are the best ways to keep your Bitcoin secure – or at least as secure as possible.
How do Bitcoin wallets work?
It is important to understand that no matter what you do, you will not be storing the bitcoin itself. This is because bitcoin is not an object, it is an encrypted address on the blockchain. You have a unique key that unlocks a specific bitcoin location, and this is what you need to protect at all times by storing it in your wallet.
That being said, there are several different ways to store your bitcoin depending on how secure you want to be and how much you plan to use it on a regular basis.
Why you should use a hardware wallet
An easier way to store bitcoins and other cryptocurrencies is in a digital wallet on the Internet or locally on your smartphone or computer. But leaving your bitcoin in plain sight can leave you vulnerable to hacker and phishing attacks. This is why the best option is a hardware wallet that stores your bitcoins offline.
Most hardware wallets look like USB sticks and can be easily plugged into a computer. For security purposes, they use a PIN as well as a secondary password called a “seed” in case you forget the PIN. If you’ve forgotten both passwords, you’ve pretty much screwed up, so it might be worth writing the seed to a safe place while offline.
The other biggest disadvantage of a hardware wallet is that if you lose it, you won’t be able to recover your bitcoins. Therefore, be sure to create at least one backup on another encrypted storage device.
As for the specific model, there are plenty of solid options for under $ 100. Wired recommends the Trezor or Ledger Nano S , and you can find a more detailed comparison of the current top models here .
Other options
Another problem with hardware wallets is that they can make it much more difficult to actually spend your bitcoins. The best solution is to store a small amount of bitcoin in a digital wallet like Mycelium Wallet , which is designed to work with offline storage devices.
Finally, if you want Bitcoin to stay offline but don’t want to deal with a hardware wallet, you might consider a paper wallet instead. It’s actually just a piece of paper with the public and private keys printed on it that you can use to access your bitcoin.
If you don’t plan on touching bitcoins for a while, then a paper wallet is a good option. Just make sure you put your paper wallet in a safe place – and don’t forget where it is.