Storing bitcoins - Revision history

NotATether: add details

2025-12-19T14:16:21Z

add details

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	=== Brain wallets ===		=== Brain wallets ===

	Brain wallets are an old type of wallet format which was very common to use in the early 2010s. It involves generating a password and then performing single SHA256 hash to obtain a bitcoin private key to use for transactions. The main advantage of wallet type is its ease of remembering the private key. However, this is eclipsed by its many drawbacks. Cybercriminals have wiped clean most brain wallets using GPU farms and password generation tools. It is also easier for an amateur hacker to steal funds contained inside a brain wallet if the password was sloppily chosen.		Brain wallets are an old type of wallet format which was very common to use in the early 2010s. It involves generating a password and then performing single SHA256 hash to obtain a bitcoin private key to use for transactions. The password is supposed to be memorized in your head, and not written down. The main advantage of wallet type is its ease of remembering the private key. However, this is eclipsed by its many drawbacks. Cybercriminals have wiped clean most brain wallets using GPU farms and password generation tools. It is also easier for an amateur hacker to steal funds contained inside a brain wallet if the password was sloppily chosen. Additionally, if you forget the password at any point, you might permanently lose access to your coins.

	Main article: [[Brainwallet]]		Main article: [[Brainwallet]]

NotATether: Add brain wallets

2025-12-19T14:14:51Z

Add brain wallets

← Older revision		Revision as of 14:14, 19 December 2025
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	Main article: [[Paper wallets]]		Main article: [[Paper wallets]]

			=== Brain wallets ===

			Brain wallets are an old type of wallet format which was very common to use in the early 2010s. It involves generating a password and then performing single SHA256 hash to obtain a bitcoin private key to use for transactions. The main advantage of wallet type is its ease of remembering the private key. However, this is eclipsed by its many drawbacks. Cybercriminals have wiped clean most brain wallets using GPU farms and password generation tools. It is also easier for an amateur hacker to steal funds contained inside a brain wallet if the password was sloppily chosen.

			Main article: [[Brainwallet]]

	=== Cloud storage ===		=== Cloud storage ===

Calliptamus: /* Custodial wallets */

2025-05-17T09:48:41Z

Custodial wallets

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	Custodial wallets are where an exchange, broker or other third party holds your bitcoins in trust.		Custodial wallets are where an exchange, broker or other third party holds your bitcoins in trust.

	The number one rule to storing bitcoin is this: if you don’t hold the private keys, you don’t actually own the assets. There are many historical examples of loss due to custodial wallets: Bitcoinica, Silk Road, Bitfloor, [[Collapse of Mt. Gox\|MTGOX]], Sheep Marketplace, BTC-e, Bitstamp, Bitfinex, Bithumb, Cryptsy, Bter, Mintpal and many more<ref>https://bitcointalk.org/index.php?topic=576337</ref>		The number one rule to storing bitcoin is this: if you don’t hold the private keys, you don’t actually own the assets. There are many historical examples of loss due to custodial wallets: Bitcoinica, Silk Road, Bitfloor, [[Collapse of Mt. Gox\|MTGOX]], Sheep Marketplace, BTC-e, Bitstamp, Bitfinex, Bithumb, Cryptsy, [[BTER\|Bter]], Mintpal and many more<ref>https://bitcointalk.org/index.php?topic=576337</ref>

	==== "Isn't it just like keeping your money in a bank?" ====		==== "Isn't it just like keeping your money in a bank?" ====

WikiR: Removed broken link (bitzuma.com), non-existent references (Twitter & Medium pages), and outdated Blogspot content for improved accuracy and relevance.

2025-02-19T14:29:55Z

Removed broken link (bitzuma.com), non-existent references (Twitter & Medium pages), and outdated Blogspot content for improved accuracy and relevance.

← Older revision		Revision as of 14:29, 19 February 2025
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	* https://www.reddit.com/r/Bitcoin/comments/6nj0eb/reminder_beware_of_data_rot_always_make_paper/		* https://www.reddit.com/r/Bitcoin/comments/6nj0eb/reminder_beware_of_data_rot_always_make_paper/
	* https://tedjonesweb.blogspot.co.uk/2017/08/do-not-use-flash-memory-ssd-drives.html

	Those articles recommend using GPG for encryption or a printer, instead a better solution is [[seed phrase]]s.		Those articles recommend using GPG for encryption or a printer, instead a better solution is [[seed phrase]]s.
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	Bitcoin is no different. The technology discussed on this page is only a tool to tip the scales in the defender's favour. Following from this principle, the way to beat the $5 wrench attack is to bear arms. Either your own, or employ guards, or use a safety deposit box, or rely on the police forces and army; or whatever may be appropriate and proportionate in your situation. If someone physically overpowers you then no technology on Earth can save your bitcoins. You can't be your own bank without bank-level security.		Bitcoin is no different. The technology discussed on this page is only a tool to tip the scales in the defender's favour. Following from this principle, the way to beat the $5 wrench attack is to bear arms. Either your own, or employ guards, or use a safety deposit box, or rely on the police forces and army; or whatever may be appropriate and proportionate in your situation. If someone physically overpowers you then no technology on Earth can save your bitcoins. You can't be your own bank without bank-level security.

	~~See Also: [https://twitter.com/i/moments/942083114385281024 Guns + Bitcoin Hardware Wallets]~~

	See Also: [https://www.youtube.com/watch?v=H16Zus3GAVA Advice by a former police officer about physical security in bitcoin]		See Also: [https://www.youtube.com/watch?v=H16Zus3GAVA Advice by a former police officer about physical security in bitcoin]
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	* [https://github.com/BlockchainCommons/SmartCustodyWhitePapers/blob/master/%23SmartCustody-_Simple_Self-Custody_Cold_Storage_Scenario.md SmartCustody: Simple Self-Custody Cold Storage Scenario]		* [https://github.com/BlockchainCommons/SmartCustodyWhitePapers/blob/master/%23SmartCustody-_Simple_Self-Custody_Cold_Storage_Scenario.md SmartCustody: Simple Self-Custody Cold Storage Scenario]

	* https://bitzuma.com/posts/a-gentle-introduction-to-bitcoin-cold-storage/

	* https://medium.com/@lopp/thoughts-on-secure-storage-of-bitcoins-and-other-crypto-assets-210cadabb53d

	* https://medium.com/@michaelflaxman/how-should-i-store-my-bitcoin-43874ac208e4		* https://medium.com/@michaelflaxman/how-should-i-store-my-bitcoin-43874ac208e4

Pancyrus: Properly hyphenated compound words.

2021-03-21T05:35:14Z

Properly hyphenated compound words.

← Older revision		Revision as of 05:35, 21 March 2021
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	As bitcoin is a digital asset, it can be very un-intuitive to store safely. Historically many people have lost their coins but with proper understanding the risks can be eliminated. If your bitcoins do end up lost or stolen then there's almost certainly nothing that can be done to get them back.		As bitcoin is a digital asset, it can be very un-intuitive to store safely. Historically many people have lost their coins but with proper understanding the risks can be eliminated. If your bitcoins do end up lost or stolen then there's almost certainly nothing that can be done to get them back.

	'''tl;dr''' The best way to store bitcoin is to either use a [[hardware wallet]], a [[~~Multisignature~~\|~~multisignature~~ wallet]] or a [[Cold storage\|cold storage wallet]]. Have your wallet create a [[seed phrase]], write it down on paper and store it in a safe place (or several safe places, as backups). Ideally the wallet should be backed by your own [[full node]].		'''tl;dr''' The best way to store bitcoin is to either use a [[hardware wallet]], a [[Multi-signature\|multi-signature wallet]] or a [[Cold storage\|cold storage wallet]]. Have your wallet create a [[seed phrase]], write it down on paper and store it in a safe place (or several safe places, as backups). Ideally the wallet should be backed by your own [[full node]].

	== Introduction ==		== Introduction ==
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	Some downsides are that hardware wallets are recognizable physical objects which could be discovered and which give away that you probably own bitcoins. This is worth considering when for example crossing borders. They also cost more than software wallets. Still, physical access to a hardware wallet does not mean that the keys are easily compromised, even though it does make it easier to compromise the hardware wallet. The groups that have created the most popular hardware wallets have gone to great lengths to harden the devices to physical threats and, though not impossible, only technically skilled people with specialized equipment have been able to get access to the private keys without the owner's consent. However, physically-powerful people such as armed border guards upon seeing the hardware wallet could force you to type in the PIN number to unlock the device and steal the bitcoins.		Some downsides are that hardware wallets are recognizable physical objects which could be discovered and which give away that you probably own bitcoins. This is worth considering when for example crossing borders. They also cost more than software wallets. Still, physical access to a hardware wallet does not mean that the keys are easily compromised, even though it does make it easier to compromise the hardware wallet. The groups that have created the most popular hardware wallets have gone to great lengths to harden the devices to physical threats and, though not impossible, only technically skilled people with specialized equipment have been able to get access to the private keys without the owner's consent. However, physically-powerful people such as armed border guards upon seeing the hardware wallet could force you to type in the PIN number to unlock the device and steal the bitcoins.

	=== ~~Multisignature~~ wallets ===		=== Multi-signature wallets ===

	''Main article: [[~~Multisignature~~]]''		''Main article: [[Multi-signature]]''

	A ~~multisignature~~ wallet is one where multiple private keys are required to move the bitcoins instead of a single key. Such a wallet can be used for requiring agreement among multiple people to spend, can eliminate a single point of failure, and can be used as form of backup, among other applications.		A multi-signature wallet is one where multiple private keys are required to move the bitcoins instead of a single key. Such a wallet can be used for requiring agreement among multiple people to spend, can eliminate a single point of failure, and can be used as form of backup, among other applications.

	These private keys can be spread across multiple machines in various locations with the rationale that malware and hackers are unlikely to infect all of them. The multisig wallet can be of the m-of-n type where any m private keys out of a possible n are required to move the money. For example a 2-of-3 multisig wallet might have your private keys spread across a desktop, laptop, and smartphone, any two of which are required to move the money, but the compromise or total loss of any one key does not result in loss of money, even if that key has no backups.		These private keys can be spread across multiple machines in various locations with the rationale that malware and hackers are unlikely to infect all of them. The multisig wallet can be of the m-of-n type where any m private keys out of a possible n are required to move the money. For example a 2-of-3 multisig wallet might have your private keys spread across a desktop, laptop, and smartphone, any two of which are required to move the money, but the compromise or total loss of any one key does not result in loss of money, even if that key has no backups.

	~~Multisignature~~ wallets have the advantage of being cheaper than hardware wallets since they are implemented in software and can be downloaded for free, and can be nearly as convenient since all keys are online and the wallet user interfaces are typically easy to use.		Multi-signature wallets have the advantage of being cheaper than hardware wallets since they are implemented in software and can be downloaded for free, and can be nearly as convenient since all keys are online and the wallet user interfaces are typically easy to use.

	Hardware and ~~multisignature~~ wallets can be combined by having a ~~multisignature~~ wallet with the private keys held on hardware wallets; after all a single hardware wallet is still a single point of failure. Cold storage and ~~multisignature~~ can also be combined, by having the ~~multisignature~~ wallet with the private keys held in cold storage to avoid them being kept online.		Hardware and multi-signature wallets can be combined by having a multi-signature wallet with the private keys held on hardware wallets; after all a single hardware wallet is still a single point of failure. Cold storage and multi-signature can also be combined, by having the multi-signature wallet with the private keys held in cold storage to avoid them being kept online.

	=== Cold storage wallets ===		=== Cold storage wallets ===
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	A hot wallet refers to keeping single-signature wallets with private keys kept on an online computer or mobile phone. Most bitcoin wallet software out there is a hot wallet. The bitcoins are easy to spend but are maximally vulnerable to malware or hackers. Hot wallets may be appropriate for small amounts and day-to-day spending.		A hot wallet refers to keeping single-signature wallets with private keys kept on an online computer or mobile phone. Most bitcoin wallet software out there is a hot wallet. The bitcoins are easy to spend but are maximally vulnerable to malware or hackers. Hot wallets may be appropriate for small amounts and day-to-day spending.

	A user might have a ''spending account'' hot wallet for day-to-day convenient spending with the majority of their funds on a ''savings account'' which is stored with much more security (cold storage / hardware wallet / ~~multisignature~~).		A user might have a ''spending account'' hot wallet for day-to-day convenient spending with the majority of their funds on a ''savings account'' which is stored with much more security (cold storage / hardware wallet / multi-signature).

	== Bad wallet ideas ==		== Bad wallet ideas ==
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	There are multiple ways that can be utilized to beat this attack: by hiding, by defending yourself, by not letting others know your Bitcoin wealth or holdings, or by implementing security procedures which would prevent you from being able to surrender funds in such an attack, thereby reducing the appeal for an attacker to perform such an attack in the first place.		There are multiple ways that can be utilized to beat this attack: by hiding, by defending yourself, by not letting others know your Bitcoin wealth or holdings, or by implementing security procedures which would prevent you from being able to surrender funds in such an attack, thereby reducing the appeal for an attacker to perform such an attack in the first place.

	Stored bitcoins are not secured by [[seed phrase]]s, [[hardware wallet]]s, [[~~multisignature~~]], passwords, hash functions or anything like that; they are secured by ''people''.		Stored bitcoins are not secured by [[seed phrase]]s, [[hardware wallet]]s, [[multi-signature]], passwords, hash functions or anything like that; they are secured by ''people''.

	Technology is never the root of system security. Technology is a tool to help people secure what they value. Security requires people to act. A server cannot be secured by a firewall if there is no lock on the door to the server room, and a lock cannot secure the server room without a guard to monitor the door, and a guard cannot secure the door without risk of personal harm.<ref>[https://github.com/libbitcoin/libbitcoin/wiki/Risk-Sharing-Principle Libbitcoin wiki Risk Sharing Principle]</ref>.		Technology is never the root of system security. Technology is a tool to help people secure what they value. Security requires people to act. A server cannot be secured by a firewall if there is no lock on the door to the server room, and a lock cannot secure the server room without a guard to monitor the door, and a guard cannot secure the door without risk of personal harm.<ref>[https://github.com/libbitcoin/libbitcoin/wiki/Risk-Sharing-Principle Libbitcoin wiki Risk Sharing Principle]</ref>.

Belcher: /* Further reading */ reword

2021-02-01T19:18:56Z

Belcher: /* The 5 dollar wrench attack */ Add link to talk by Coinsure

2020-12-22T16:26:40Z

The 5 dollar wrench attack: Add link to talk by Coinsure

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	See Also: [https://twitter.com/i/moments/942083114385281024 Guns + Bitcoin Hardware Wallets]		See Also: [https://twitter.com/i/moments/942083114385281024 Guns + Bitcoin Hardware Wallets]

			See Also: [https://www.youtube.com/watch?v=H16Zus3GAVA Advice by a former police officer about physical security in bitcoin]

	== See also ==		== See also ==

Fresheneesz: Adding see also section linking to the list of storage methods.

2020-06-06T19:29:48Z

Adding see also section linking to the list of storage methods.

← Older revision		Revision as of 19:29, 6 June 2020
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	See Also: [https://twitter.com/i/moments/942083114385281024 Guns + Bitcoin Hardware Wallets]		See Also: [https://twitter.com/i/moments/942083114385281024 Guns + Bitcoin Hardware Wallets]

			== See also ==

			* [[Links to Storage Methods]]

	== Further reading ==		== Further reading ==

Furunodo:

2020-06-06T09:19:39Z

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	[[Category:Security]]		[[Category:Security]]
	[[Category:Wallets]]		[[Category:Wallets\| ]]

Furunodo: Category:Wallets

2020-06-06T09:16:42Z

Category:Wallets

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	[[Category:Security]]		[[Category:Security]]
			[[Category:Wallets]]

← Older revision		Revision as of 19:18, 1 February 2021
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	* Two-factor authentication on custodial wallets doesn't work as well as you might think https://medium.com/@CodyBrown/how-to-lose-8k-worth-of-bitcoin-in-15-minutes-with-verizon-and-coinbase-com-ba75fb8d0bac		* Two-factor authentication on custodial wallets doesn't work as well as you might think https://medium.com/@CodyBrown/how-to-lose-8k-worth-of-bitcoin-in-15-minutes-with-verizon-and-coinbase-com-ba75fb8d0bac

	* This is why you shouldn’t use ~~texts~~ for two-factor authentication https://www.theverge.com/2017/9/18/16328172/sms-two-factor-authentication-hack-password-bitcoin Hacking 2FA based on SMS is easy.		* This is why you shouldn’t use SMS for two-factor authentication https://www.theverge.com/2017/9/18/16328172/sms-two-factor-authentication-hack-password-bitcoin Hacking 2FA based on SMS is easy.

	* [[Backup and Storage Methods]]		* [[Backup and Storage Methods]]