Talk to me about cold storage please

[fishfansam]

I am a novice bitcoin user (at best) and was hoping to get some advice and input from the community of users who are much smarter than I about bitcoin in general.

I have been using bitcoin for a variety of transactions for over a year, but I really don't have the tech-mind to understand how it actually works from a network perspective.  I use only mobile wallets and exchanges and typically haven’t held bitcoin for too long.  

I want to hold some for the longterm – basically set it aside as part of my investment portfolio and not touch it for any transactions.

I have read about a number of "cold storage" options but still can't wrap my head around which one I should adopt.  After much reading I must say I'm still confused.

I am leaning towards a paper wallet (using a wired printer with no hard drive and an air-gapped cpu to generate the wallet).  I would like produce more than one address and split up my BTCs.  I would then store them in various safety deposit boxes.  Any input about what is the most secure way to generate this wallet would be appreciated.

I have read about Trezor, however I'm wondering if there is any advantage to this route.  What is the hardware defaults and/or the company goes out of business and I can't replace the unit if it's lost or stolen?  Is the mnemonic phrase that is generated compatible with other wallets?

In terms of using a seed phrase from a wallet like electrum or mycelium, I would still be required to store this phrase somewhere.  I would likely go the same route and put them in safety deposit boxes.  What I'm confused about is whether this seed phrase is only compatible with the same wallet from which it was generated.  If mycelium is no longer available, is there a way to use that seed phrase to retrieve my funds/wallet/keys?


Much of this confusion on my ends stems from me not having an understanding of how actual pairs of private/public keys are generated, and then also how a seed phrase is linked to a set of these keys.  

Any input would be great.  Thanks!

[hakuna]

Hi, I will try to answer to some of your questions.
First of all, the adoption depends on your needs: some people are ok with paper wallets, others prefer more "solid" solutions such as Trezor or Ledger.
The advantage of the latters, is that you have an additional password to protect access to your data, and you can backup your wallet by using the mnemonic phrase. I am not aware whether you could use the mnemonic phrase to backup from one brand to another.

Maybe some more skilled users can answer to your more technical questions.

I think you could also be interested in this article, which is about security and different wallets https://medium.com/santiment/the-crypto-traders-guide-to-online-security-8eeffa6839ed

Let us know what type of wallet you decided to use!

[Welsh]

Don't be put off by the process. It's probably the best investment of time you can take before even investing in Bitcoin itself.

The wiki will probably have what your looking for and answer some of your questions: https://en.bitcoin.it/wiki/How_to_set_up_a_secure_offline_savings_wallet

[Gameflip ICO]

Cold storage regards to offline wallet, such as Electrum , Bitcoin Core. They are more secured than online, because here hackers cannot steal them

[Florg]

Don't be put off by the process. It's probably the best investment of time you can take before even investing in Bitcoin itself.

The wiki will probably have what your looking for and answer some of your questions: https://en.bitcoin.it/wiki/How_to_set_up_a_secure_offline_savings_wallet

Great resource, thanks for sharing!  Can anyone elaborate more on creating an unsigned transaction then signing it on an airgapped computer?

[GreatOrchid]

if you have the money to afford a trezor or a nano ledger buy it, maybe it is upto $90 each one, but it is worthly, because you are going to be 100% safe from hacks and pishings that you might search on the internet.
It is difficult to understand how it works at the beggining, but if you are a little bit experienced you will know how to manage it in just matter of minutes. I am using one, and it is too safe and transactions are good too, it makes you feel much more proffesional when you are using one.

[Andre_Goldman]

we can have security on rest data .. transit data is way much more harder ...

[Nomad88]

if you have the money to afford a trezor or a nano ledger buy it, maybe it is upto $90 each one, but it is worthly, because you are going to be 100% safe from hacks and pishings that you might search on the internet.
It is difficult to understand how it works at the beggining, but if you are a little bit experienced you will know how to manage it in just matter of minutes. I am using one, and it is too safe and transactions are good too, it makes you feel much more proffesional when you are using one.

I couldn't agree more. I keep reading about most advanced Bitcoin users changing their paper wallets to ledger and trezor. I think one could agree about the definition of %100 safety when it comes to computer science, but it is surely the most safest way of keeping your coins safe. I would advice everyone to get one and for daily use purposes, getting an electrum wallet.

[fishfansam]

Thanks vm for the replies.

When it comes to trezor/nano ledger, how do we have full faith that these products are secure.  These devices will provide a seed phrase when you initially set them up - how do we know with certainty that the manufacturers have no record of these seed phrases?  I suppose the same question could be asked of any wallet that generates them.

[RGBKey]

Thanks vm for the replies.

When it comes to trezor/nano ledger, how do we have full faith that these products are secure.  These devices will provide a seed phrase when you initially set them up - how do we know with certainty that the manufacturers have no record of these seed phrases?  I suppose the same question could be asked of any wallet that generates them.

I believe the ledger has a method to ensure the hardware was not tampered with, but that doesn't help you if the code itself is generating bad addresses. You should look at Ledger's Is Ledger an open source project article.

[fishfansam]

I'm going to order a Trezor along with a cryptosteel in order to safekeep my 24 word seed phrase.  Typically I won't carry the trezor with me and keep a certain amount of BTC in a mobile wallet for day to day transactions.  However my "savings" will remain on the trezor with the seed stored in a separate location (I will keep it in at least two locations, though will only have one cryptosteel)