Cold Storage Declassified - Essay Example

Cold Storage Steps

We Will Write A Custom Essay Sample On
ANY TOPIC SPECIFICALLY
FOR YOU

For Only $13.90/page


order now

A big concern in the Bitcoin community is keeping your bitcoins safe and secure.

Right now, there are already a couple of solutions to keep your bitcoins safe such as encryption, muti-signature wallets, or anti-malware software.

These methods can be effective, but the most secure method is what is called “cold storage.”

This terminology is given because there is no hot “electricity” associated with your wallet. In other words, your wallet is offline and not connected to the computer or internet.

Your id in the Block Chain still exists, it is just idle until a time when you connect back up with your wallet software and provide valid access criteria. To make cold storing easy, you must use the Bitcoin Core wallet that you download to your desktop. You can see details about how to install and use Bitcoin Core Wallet on our website.

Here are the steps to simple cold storage:

Step 1: Create a Bitcoin Core wallet address.

Step 2: Deposit said number of bitcoins into that address.

Step3: Now encrypt that address using the Bitcoin Core wallet settings. Make sure to remember or write down your encrypted password.

Step 4: Go to where your Bitcoin Core wallet is located and open the Bitcoin Core folder.

Step 5: Now copy the wallet.dat files over a new (never used) Flash drive.

Step 6: Store your Flash drive with the wallet.dat files somewhere safe along with the piece of paper that your passphrase is on. The safest place to store them would be in a safety deposit box with a “trusted” local bank.

Step 7: Delete all bitcoin software from your computer! (Only do this after you have backed up your files.)

Note: Make sure you write down your passphrase and wallet address while making several copies of it to put in secure locations. Also, do a test backup/restore with a small amount of bitcoin first before cold storing a large amount with no practice.

Now your bitcoins are secure and safe! No longer do you have to be worried about the security of your bitcoins.

The next task is to get them out of cold storage and to use them. To do so simply retrieve your flash drive and encrypted password and plug the flash drive to an uncompromised computer. Then replace the wallet.dat files in a blank Bitcoin Core wallet with the ones on the flash drive. Once the Bitcoin Core wallet with the correct wallet.dat files has synced with the bitcoin network, your bitcoin balance will be restored.

Coinsafe: Vault-Wallet

For those of you that don’t feel comfortable with doing this yourself you can use cold storage services like CoinSafe. They do all of the steps listed above for you and will store up to 10btc for free. Your bitcoin private keys are generated on specialized hardware and never touch an internet-connected device. Private keys are encrypted and then secured in armored bank vaults in multiple non-neighboring states. All withdrawal requests require both email and phone verification. However, you can also designate a trusted “vault guardian” (a friend, family member, lawyer, etc.) whose approval is also required.

You can keep your bitcoins really much safer than an online bank account.