This article is part 2 in a 4 part series about ideas on how to protect your cryptocurrency and yourself.
Now that we have taken some steps to secure your computer, let’s take a look at ways to store your crypto on your desktop computer.
Currently, 2% of all bitcoin is considered ‘lost’ and not able to be recovered due to lost keys and or death of the owner. That is ~3 Billion USD worth at the current price! Cryptocurrencies are a valuable resource, but only if they can be accessed! The goal of this series is to make sure your crypto doesn’t become ‘lost’ as well, either to you or your beneficiaries. Read on to learn more about how to keep your crypto easy for you to access but difficult to lose or steal.
As I mentioned in the first article, make sure you have a backup of your wallet.dat file and your private keys. You could also ‘dumpwallet’ or export the private keys of your addresses. Just make sure that your funds are stored in the actual address and not a change address.
Here are some ideas on what to do with those backup files:
Good – Copy the file to a flash drive, SD Card, or other types of portable media.
Better – Copy the file to an encrypted flash drive. I have personally used the Kingston version of this and enjoy the way it works. Want to buy one? Amazon: 4GB – 8GB – 16GB
Refer back to (part 1) to see password recommendations and remember to save it somewhere other than where you store the drive; unless it is part of your death contingency plans, which we will discuss later.
Another option that is considered to be more secure, would be to write your keys down somewhere in the physical world. Keep in mind to double and triple check as copying something by hand can lead to errors.
Good – Write down your keys and store the paper in a hidden or secure location.
Better – Encode your keys with a handwritten/manual cypher and store in a hidden or secure location. Read more about cyphers here.
A cold wallet is any wallet that is not connected to the internet. Since your wallet only needs to be connected to the network in order to send – not receive – funds, this type of wallet reduces the chance of a hacker getting access to your funds. One of the beautiful things with BitcoinConfiential is that you can stake from a cold wallet while helping the network, getting rewards, and keeping your funds secure, all at the same time.
Hardware wallets – One of the most popular methods of cold storage is a hardware wallet. Keep an eye out for part 3 where we will go into more depth on them!
Paper wallets – A good offline or physical way to store crypto, as the keys are not retained digitally. This would be better for a one-time use address for long-term storage. Once you have imported the keys into another wallet, they lose their enhanced security. A good paper wallet generator would allow for the creation of an offline key, like SmartCash provides here: https://paperwallet.smartcash.cc/
getrandomkeypair – SmartCash and some other wallets have a console command that can be done from a secure offline computer. This would generate a public and private key pair directly from the wallet. You could then print it, save it, or copy it down somewhere.
Multiple Signature (Multi-Sig)
This feature, available on both the Core and electrum wallet of SmartCash, requires two wallets to sign a transaction to make it valid. One of the wallets can be on your main machine, while the other one is on an offline device. In this way, it becomes challenging for an attacker or malware to steal your coins.
Comment below to let me know some of the creative ways you could secure your crypto. The best idea will win a $25 App Store & iTunes gift card from smartcashpay.com and be featured in my next article!
Missed part 1? Check it out here!