How To Store Your CryptoCurrency Safely

Bitcoin Storing – How To Store Your

Bitcoin And Other Cryptocurrency

Safely

Keeping your bitcoins safe from prying eyes, malicious bots, hackers and

your garden-variety thieves, is not easy. Everyone wants a piece of bitcoin

nowadays, it seems.

If people know you’ve invested in Bitcoin in the early days, and you still

have your investment with you, then they know you’re literally sitting on top

of a fortune. We don’t want to sound sinister, but it’s just sad a fact of life

that some people will do anything for money or in this case, bitcoins.

There are many ways you can keep your precious digital fortune safe. Just

like your paper money, you can store different amounts of bitcoin in

different types of wallets. Some are ‘hot’ wallets while some are considered

‘cold.’ You’ll learn more about these types of wallets as we go through each

of them in this guide.

It’s important to mention here that when we say ‘keeping the bitcoins safe,’

we’re actually referring to keeping the ‘private key’ safe. Within your wallet,

your bitcoins would have an associated address, and each bitcoin address

is composed of a ‘public key’ and a ‘private key.’

The public key is THE bitcoin address itself, and it can be shared with

anybody. The public key can be compared to an email address. Everybody

who knows your email address can send you emails.

The private key is analogous to your email password. Without a password,

no one can read your email. In the same way, without a private key, you

can’t make a transaction to send bitcoins to another user. This is why

keeping the private key safe is of utmost importance.

If hackers get hold of your private key, they can send ALL your bitcoins to

their own accounts.

Because of the way Bitcoin is designed, there’s no way for you to know

where your bitcoins would be sent and there is absolutely zero chance of

retrieving any bitcoins.

Bitcoin’s most attractive features such as near-instant transfers,

anonymous and irreversible transactions are also your biggest concerns if

your private keys get stolen. Once your bitcoins are stolen and transferred

to another user, you really have no other choice but to accept the fact and

move on. There is nothing else you can do.

So let’s move on to how you can keep your private keys, and your bitcoins,

safe from hackers and thieves.

Online Wallets

The easiest way to get started with bitcoins is by getting an online wallet.

You don’t even need to have bitcoins yet to get your own wallet. You can

simply go to sites like Blockchain.info, Coinbase.com, and other bitcoin

exchange platforms to create your first wallet.

Online or web wallets are great for those just getting their feet wet with

bitcoins and those who don’t have a sizeable inventory of bitcoins yet.

They are easy to setup, they’re very convenient, and you can access them

from anywhere with an Internet connection. Online wallets are ‘hot wallets’

for this very reason – anyone can access your wallet, too!

In fact, what’s even worse is that most web wallets store your private keys

on their servers so if the platform is hacked, then your bitcoins are as good

as gone.

Likewise, if a serious technical glitch happens on the site, your private keys

could be compromised or totally gone. There’s also the very real threat of

having your account limited or suspended by the platform. You may

unknowingly go against the site’s terms of service or something similar, and

they can shut your account down, and your private keys, forever.

If you’ve got a significant bitcoin stash, then it’s best if you move it to a

more secure ‘cold’ wallet that’s not connected to the Internet. Not having

control over your bitcoins is a scary thought and one that you shouldn’t take

a chance on.

While there are inherent risks to online wallets, it’s not all bad especially if

you make transactions frequently. You can just store a few bitcoins in your

online wallet for those regular transactions and keep the rest in a more

secure wallet.

This way you’ll still get to experience the convenience of an online wallet

while having peace of mind that a large percentage of your bitcoins are out

of harm’s way. Mobile Wallets

Just like online wallets, mobile app wallets are also ‘hot’ wallets because

you can easily access your bitcoins anywhere you’ve got an Internet

connection. Out of all the wallets on this guide, mobile wallets are the most

convenient. It may not be the safest, but no one can deny its convenience.

You can send bitcoin payments to any merchant online or offline. Some

web wallets have a mobile counterpart. For instance, both Blockchain.info

and Coinbase mobile wallets are synced to your web wallets which is really

very convenient as both wallets sync automatically so you can see your

balance when you log in or access either wallet.

This convenience is precisely why more local businesses should accept

bitcoin payments. The Bitcoin community is growing at an exponential rate,

and these savvy users would be installing mobile wallets on their iPhones

and Android smartphones.

There’s probably no easier way for them to pay than just scanning your

bitcoin address’ QR code and hitting that Send button to pay for your

products or services!

However, not everything is good with mobile wallets. For instance, your

private keys can still be accessed by hackers whether it’s saved on a third

party server or your mobile phone.

If you lose your mobile device or it gets damaged, you could also

potentially lose all your bitcoins and other cryptocurrency if you didn’t make

backup copies of your private keys and stored them somewhere safe. The best way to take advantage of a mobile wallet is by only transferring

what you need from a more secure wallet (like a hardware wallet) to your

mobile wallet. This way even if you lose your phone, and you can’t recover

your private keys on there, then you won’t be losing all your bitcoins.

Desktop Wallet

The third type of wallet you can use to store your bitcoins relatively safely is

a desktop wallet. It’s basically a desktop app where you store your private

keys in. The most popular one, though not always the most practical one, is

Bitcoin Core.

When you install the software, you need to make sure you have more than

150GB (or more) free disk space as it will automatically download the entire

blockchain dating back to 2009!

You can’t not download the blockchain as Bitcoin Core will not process any

transaction unless the entire ledger has been downloaded to your system.

Once it’s been downloaded, you can then start sending and receiving

bitcoins to your wallet.

If you don’t have plenty of disk space to spare, nor the bandwidth to

download such a massive file, then here’s some good news for you --

Bitcoin Core is not the only desktop wallet available nowadays.

You’ve actually got plenty of choices to choose from such as Electrum,

Bither, Armory, and more, which don’t require you to download the

blockchain as it uses SPV (Simple Payment Verification) technology. Desktop wallets are relatively easy to use, and it’s safer than a web or

mobile wallet because you can just disconnect your computer from the

Internet to avoid hackers from getting in your system and stealing your

private keys.

Of course, it’s not as convenient as a web or mobile wallet, but at least you

have full control over your private keys. You can keep a backup copy of the

keys just in case your computer gets stolen, infected with a virus or

permanently damaged.

If you don’t backup your private keys, you could lose all your bitcoins in

the blink of an eye.

Paper Wallet

It might sound weird at first to store your digital cryptocurrency in a paper

wallet. You’re probably going to ask why anyone would do that when

bitcoin doesn’t exist physically.

Bitcoin and paper may not seem like a match made in heaven, but when

you think about it, they actually do. Well, on some level at least.

Paper wallets are a form of ‘cold storage’ because Internet hackers won’t

ever get to hack into your little piece of paper. There are plenty of skilled

hackers who can find a way to access most computers and servers, but

we’re pretty sure paper isn’t one of them.

Your bitcoins may be safe from hackers but not from offline thieves. If you

don’t take care of your paper wallet, if you leave it lying around in unsecured places, then you’re literally giving someone the keys to your

fortune!

Water is also something you should consider when using paper wallets.

Storing your wallets in zip locks and other water resistant containers should

help overcome this problem.

Paper wallets are not as convenient as mobile or web wallets, but they are

definitely more secure. You can print both your public and private keys and

hide it somewhere safe like a safety deposit box.

Paper wallets are the best type of wallet for storing your private keys for

long periods of time.

If you don’t intend to touch your bitcoins for months or years, then you can

create paper wallets. Of course, just like we’ve recommended in previous

sections, it’s best to keep a few bitcoins (only what you can afford to lose)

in more convenient wallets so you can continue sending and receiving

bitcoins. The rest of your private keys can go in the paper wallet.

Hardware Wallet

There’s a consensus in the Bitcoin community that hardware wallets are

the safest bitcoin wallets and something every serious Bitcoin investor and

enthusiast should consider buying. Unlike the other wallet types we’ve

covered so far in this guide, hardware wallets are relatively expensive.

Of course, if you’ve got a considerable number of bitcoins to protect, then

it’s really a small price to pay for keeping your fortune safe. Most hardware

wallets support a host of cryptocurrencies so if you’ve invested in non-bitcoin currencies too, then you’ll find this type of wallet to be an excellent

purchase.

Hardware wallets are basically powerful and durable USB sticks which you

plug into your computer when making a bitcoin or cryptocurrency

transaction. When you’re done, simply remove the wallet and store it

somewhere safe.

A unique security feature on hardware wallets is the ability to generate

private keys offline which means that it’s less vulnerable to hacker attacks.

These sturdy little devices allow you to bring your private keys anywhere

with you without fear of having it exposed to the outside world.

Setup is also quick and easy with hardware wallets. Depending on the

wallet, you can assign a PIN code, password, or recovery seed words

which you can use to authenticate your access as well as recover your

bitcoins in case your wallet is lost or destroyed.

Just in case you get some form of amnesia and forget your recovery

details, you should write down your secret details and hide it somewhere

only you know. Otherwise, if someone finds it, either by accident or by

design, then your bitcoins and whatever cryptocurrency you have on there

will soon be gone.

Hardware wallets are excellent for storing all your cryptocurrencies safely.

Whether you’ve got a sizeable collection of digital currency or not, you

never have to worry if your wallet will be hacked and your money stolen. Your private keys are relatively safe. You just need to make sure your

memory never fails you, and you’ll always remember where you’ve hidden

your wallet backups!

To sum up this guide, the best wallet for your bitcoins and cryptocurrencies

are actually a combination of different wallets. Use hard wallets or paper

wallets for long-term storage, desktop wallets for medium-term storage,

and web and mobile wallets for short-term storage and frequent

transactions.