The news of Gerald Cotten dying without revealing the password to cryptocurrency storage worth $190 million in Bitcoin is still alarming to investors. The widow is unable to access the cold storage. Many others investors raise concern regarding continued hacking of digital currency. I know some people are now panic thinking that their digital assets are not safe. Far from it! What you should think about right now is how to store cryptocurrency offline. So let us dig in deep and find out more about how I store my cryptocurrency offline.
How to avoid crypto theft
Cryptocurrencies remain a highly target for hackers as they can easily get away with it. They can easily hide their tracks and erase their footprints. As an investor, you lack a legal recourse to consider when criminals hack your accounts. Central banks and government entities do not regulate digital currencies.
So how can you avoid crypto theft?
- Protect your private keys and avoid sharing it
- Practice good internet security
- Avoid leaving your cryptocurrencies on the exchanges
- Use hard wallets
- Do not store much in hot wallets
- Use paper wallet for serious holdings
- Do not brag about your holdings
How to store cryptocurrency offline with cold storage
From $800 to $14,000, Bitcoin is breaking its own price record. This rapid growth is attracting people’s attention especially the aspiring investors. Regardless of the unprecedented growth, it is vital for those who have big stake with Bitcoin to seek safer storage offline. No wonder the question on how to store Bitcoin offline is becoming popular in the recent past. Did you know that Bitcoin wallets face multiple hacks? It is worth going for an extra protection and secures your money properly. There are also multiple research on how to make crypto transactions offline without bringing it online or to hot wallet in any way.
Let us look at how to store Bitcoin online
We store Bitcoin on a special Blockchain network, a wallet. We have two major categories of Bitcoin wallet. They are online wallets as well as offline wallets. In online wallet, you will store all your private keys online. You can also connect your device to the internet such as tablet, websites and exchanges among others.
According to research on cryptocurrency market, the safest way to store bitcoin offline is using a printer and a paper. You will also need a website that you can use to create an offline Bitcoin address. Here is the procedure:
- Open the Bitcoin.com paper wallet
- Save the page locally as an HTML file on your computer
- Close the page and disconnect your device form the internet
- Click on the saved local version of your Bitcoin.com wallet
- Create your Bitcoin address by flowing the procedure provided
- Once the pair of keys as well as QR codes are ready, printer the page
- Ensure that you disconnect the printer from the internet while printing
- You can now use your address to transfer funds from other online wallet
It is crucial to note that the printed page contain vital information for your Bitcoin investment. Keep it safe. If you lose it, you lose your investment.
What is a hardware wallet?
There is no difference between hardware wallet and digital bank. It enables you receive, send as well as manage your cryptocurrencies. It is a physical wallet. They are available in different sizes, shapes and colors. Some of them like the Ledger Nano S resemble a USB stick.
Did you know that a hardware wallet is one of the safest methods to store your cryptocurrency offline? As long as you have your device, you can always access your coins. This is unlike online wallet that you can only access by connecting to the internet. A hardware wallet minimizes the risks of losing your coins to hackers as it uses offline storage.
We will also have a chance to protect your cryptocurrencies against unauthorized use using an extra PIN. In case you lose your device, no one will be able to access the coins. You can use a ‘back up seed’ to regain your access to your cryptocurrencies in case you lose the device.
What is a software wallet?
We have different forms of software wallets. Each one of them comes with unique characteristics. I can say that they are hot wallets in nature you must connect to the internet. You can differentiate them by a set of cryptocurrencies that one holds as well as software platforms such as Mac and Windows. Did you know that software wallets come in three forms?
These wallets store all cryptocurrencies on your PC to enable access only to the user who keeps his/her private keys on the desktop.
Mobile wallets are available in form of smartphone apps. They are easily accessible through mobile phones. Remember that in the recent past, people walk with computers in their pockets. Keep in mind that such devices are highly vulnerable to hackers.
These web wallets allow you to access your cryptocurrencies from anywhere using any device. The website owners store all the private keys.
So, the provocative question on every investor’s mind is which of these wallets do I use? Well, let us look at this summary:
Paper wallet vs hardware wallet vs software wallet
|Features||Paper wallet||Hardware wallet||Software wallet|
|Password||Print private and public keys on a piece of paper and keep them offline||You do not have input private key on the computer||Requires a password to access your coins|
|Internet||Does not require internet||Does not require internet||Requires internet|
|Security||Safest way to store your cryptocurrencies||Most secure option to tuck you crypto||More susceptible to hackers|
What is the best way to secure your cryptocurrency?
After looking at a few pros and cons, I would go for an offline wallet or cold storage. It is the most secure way for holding your coins. These wallets are not accessible through internet. Nevertheless, come to think of it, hardware wallets are potentially safer as long as you can always remember the keys.
When to not store crypto in offline wallets
Offline wallets are a bit expensive because you have to buy the device at about $100. This is a huge amount for novice investors. We can therefore say that as a new investor in crypto market, you should not store your crypto in offline wallet.
There is no method that is 100% perfect on how to store cryptocurrency offline. It all depends on your preference in terms of security as well as convenience. I would like to advise you to combine a number of options to achieve the best offline storage method. Consider your holdings, ease to use, security and accessibility. Whichever the option, always have a backup plan. If your wallet has ‘seed words’, it is vital to keep the words safe, never lose it.
I am a data analyst by profession who loves to crunch numbers at daytime and come home wondering how my passive income numbers for the day look like. I believe in being rich rather than looking rich. Follow me for Cryptocurrency, FIRE, Personal Finance, Credit Cards and Digital Nomad updates