Storage and Security

In this post we will talk about storing and securing your crypto currencies. It will be divided in three main subjects: cold wallets, hot wallets and third party wallets.

Cold Wallets

To put it simple, cold storage means to keep a reserve of crypto currencies offline. This is often a necessary security precaution, especially dealing with large amounts of coins.

Now let’s have a look at some examples of Cold Storage methods:

• On a USB drive or other data storage medium in a safe place (e.g. safe deposit box, safe)

• On a paper wallet

• On a bearer item such as a physical bitcoin.

• Use a offline Crypto Hardware wallet

How do I create a paper wallet or a USB drive to storage my coins?

Well, to create a paper wallet all you have to do is visit the website or BitcoinTalk Announcement of the specific crypto currency you want to store. Then, most of the coins have the explanation on how to create their specific paper wallet and upon creation all you have to do is to transfer your funds there.

To create a USB drive all you have to do is to save the correct folder, containing your private keys for that specific coin, into the USB, making also multiple backups. Your private keys, alongside other data used by the wallet itself, are stored here:

Windows Users

C:\Users\YourName\AppData\Roaming\CoinName

If your “ AppData ” folder is not visible just follow this simple guide on how to make it visible (https://help.ableton.com/hc/en-us/articles/209070509-How-to-access-hidden-folders)

Mac Users (https://apple.stackexchange.com/questions/28928/what-is-the-osx-equivalent-to-windows-appdata-folder)

Hot Wallets

We already know what cold wallets are, so on the contrary hot wallets are wallets that are online and connected in some way to the Internet.

Bitcoin-related services and exchanges that are able to pay out withdrawals instantly can be said to be paying them from a hot wallet. The term can also be used loosely to refer to keeping bitcoins in an exchange where they can be withdrawn on demand. Its real-world analogy is keeping cash on person: easy access, but greatest risk of unrecoverable theft in the event of an attack.
Operating a hot wallet is also a risk to its owner, because most computer systems have hidden vulnerabilities of some sort that can eventually be used by hackers or malware to break into the system and steal the bitcoins.

Keeping large amounts of bitcoins in a hot wallet is a fundamentally poor security practice. Most, if not all of the Bitcoin losses incurred in all the known hackings in Bitcoin history can be attributed to funds kept in hot wallets.
Most reputable services offering Bitcoin withdrawal of some sort will keep a very limited number of bitcoins in a hot wallet to enable immediate withdrawals of small/typical amounts, but will require a delay and manual activity to process a larger withdrawal, as the bitcoins are retrieved from other storage.

Third Party Wallets

These are the wallets you use on exchanges, like Poloniex, Bittrex or any other centralized exchange. Also the Bitcoin debit card services like Xapo or Wirex use the same method of cloud storage, accessible anywhere in the world using any computer or mobile, where you don’t control or have access to your wallet private keys. In essence, if you don’t own your private keys you don’t own the coins in that wallet. It is always up to the third party to secure your money and most of them DO NOT take responsability in case of theaft or loss…

Final Thoughts

From the methods described above, here in BarkVille we like to dig holes and store our USB drives, with most of our coins and with multiple backups, in safe places away from preying eyes. Then we like to keep some hot wallets for our new coins to mine ( remember we are miners too ) and eventually use some third party wallets ( like Xapo or Wirex ) just for pocket change and pay the bills ( yes, we dogs, also have bills and no tax deductions at all ).

If you like this sort of informative post and/or would like to support the pack, feel free to send some dog treats this way ;)

Bitcoin Address: 3NBup2E9XVayHR5HjQe8NEV4SgwBFJ6vjc

Ethereum Address: 0x96975eD9274205185d4Ef7259Fc02f56f2A30e89

CryptoDigger
20/10/2017