Sensible Bitcoin Safety Measures

[LogicalUnit]

Hi, all! I'm still a newbie and would like some advice on protecting my investment in Bitcoin -- specifically against loss and theft. I'm using Bitcoin-qt.exe 0.8.2 on my windows 7 machine that's connected to my home network. Firstly, I have backed up my wallet to an encrypted file in my Dropbox folder. Is this sufficient to protect against loss? Secondly, should I encrypt my wallet, and will this protect against theft?

Is there anything else I should sensibly do?

Thanks

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[aceking]

Don't store your bitcoins to the pc you using everyday , search the forum for  "cold storage" , "offline wallet" , "paper wallet"  and "armory"  .
I suggest you to move the majority off your bitcoins to an offline wallet and to encrypt your wallet.dat using truecrypt and store it in online and offline places.

[Eri]

What above said, Though currently your bitcoins arnt vary safe at all.

#1 First and foremost: Encrypt your wallet with a password you will never forget that has both lower and upper case letters a well as numbers, Symbols wouldnt hurt either.

#2 Encrypting your wallet doesnt protect you in the off chance that someone already has access to your private keys. Encrypting just keeps them from getting the private keys, so they cant spend you bitcoins. if they already have them it wont stop them from spending those coins even at a future date. To this end #3.

#3 Depending on the number of bitcoins you have... It may be wise to make a new address AFTER encrypting your wallet and transferring bitcoins from your old addresses to your new address. Make a note to never use those addresses again.


#4 Unrelated but worth mentioning. transferring small amounts of bitcoins to you wallet is a bad idea. A simple and not 100% accurate example:

     *The fee to transfer bitcoins is .0005 BTC.
     *If someone sends you .0005 BTC 10 different times for a total of .005 BTC and you try to spend it, You will end up with a fee of .0005 BTC per source transaction or a fee of .005 BTC, Which eats up everything you received.

     *If someone sends you .0015 BTC 10 different times for a total of .015 BTC and you try to spend it, You will end up with a fee of .0005 BTC per source transaction or a fee of .005 BTC resulting in you sending .01BTC

     *If someone sends you .0105 BTC 1 time for a total of .0105 BTC and you try to spend it, You will end up with a fee of .0005 BTC per source transaction or a fee of .0005 BTC, leaving you .01 BTC.


Note: the new client(which you have) has moved the minimum fee to .0001 BTC, but its hardly been adopted yet, so the above still applies for now. I recommend you look into fees, and Only transfer larger amounts of bitcoins from websites if your going to try to collect from websites and faucets etc.

[Ente]

As already stated, paperwallet + Armory-offline-wallet is the way to go.

1) One wallet with little funds on your computer, and/or mobile, unencrypted, whatever.
2) A larger sum in offline storage via Armory and a second computer strictly used for that. Any old one with USB will do.
3) Long-term holdings in a paper-wallet only. Not meant to be redeemed in normal cases.

Even encrypted wallets on your regular computer are not secure at all: Once you enter your password, the malware knows your password and can grab the private keys right out of RAM anyway.
Want to create a paper-wallet on your regular computer, destroying the file after printing? You don't own your keys any more even before the printout has dried.
A dedicated, secure second computer is the only reasonable secure and convenient solution. Depending on your bitcoin holding, the addidional costs are neglictible.
Another option is rebooting your computer with a live-cd every time you want to send bitcoins. This is equally safe, but too much hassle for me, personally.

Oh: Backups, backups, backups!
Encrypt your wallet, and spread it everywhere! Email it your family, to yourself, put it on your mobile, on your USB key, on your cameras storage.

And finally:
What happens when you have a schoolbus-incident?
Hint: Give your password to someone who you trust. Or, better, an unencrypted copy. Bonus points for an unencrypted paper printout.

Ente

[LogicalUnit]

Righto, I've sent up a offline wallet with an old laptop I had lying around. I've made paper backups of everything. Wallet is encrypted. Bitcoin-qt.exe is uninstalled.

Anything else I should do?

[Ente]

Righto, I've sent up a offline wallet with an old laptop I had lying around. I've made paper backups of everything. Wallet is encrypted. Bitcoin-qt.exe is uninstalled.

Anything else I should do?

Excellent, thumps up!

Only hints I have left:
- Install a fresh OS on that notebook. Maybe give Linux a try, it's come a long way in userfriendliness! You'll get a lot of help here too.
- Finish everything on that notebook, then *never* go online with it again. If you must, format the hdd before. Don't use the notebook for anything besides Bitcoin.
- Maybe do a "disaster recovery dryrun". Like, imagine all computers are dead (fire, theft, lightning). Try to recover all Bitcoins, from encrypted backups and paperwallets. Only a verified backup is a known-good backup. Most people fail to do that regularly, me included :-)

Congratulations, you are more secure than 99% of all bitcoin-users :-)

Ente

[LogicalUnit]

Righto, I've sent up a offline wallet with an old laptop I had lying around. I've made paper backups of everything. Wallet is encrypted. Bitcoin-qt.exe is uninstalled.

Anything else I should do?

Excellent, thumps up!

Only hints I have left:
- Install a fresh OS on that notebook. Maybe give Linux a try, it's come a long way in userfriendliness! You'll get a lot of help here too.
- Finish everything on that notebook, then *never* go online with it again. If you must, format the hdd before. Don't use the notebook for anything besides Bitcoin.
- Maybe do a "disaster recovery dryrun". Like, imagine all computers are dead (fire, theft, lightning). Try to recover all Bitcoins, from encrypted backups and paperwallets. Only a verified backup is a known-good backup. Most people fail to do that regularly, me included :-)

Congratulations, you are more secure than 99% of all bitcoin-users :-)

Ente

Thanks!! Yes, I did a complete format on the old laptop before using it (Amazingly, I still had the OS disc that came with it!), and never once connected it to the internet or home network.

For anyone else reading this thread, I had to install the MSVC runtime redistributable 2008 to get Armory 32-bit to work on the offline WinXP laptop. Additionally I had to use Armory 64-bit on my online Windows 7 64-bit PC because the 32-bit version crashed.

I have tested the paper backups and they work.

I did a complete format of the USB stick I used to transfer transactions between online/offline clients.

My online PC has BitDefender installed, which scans USB devices, so it's highly unlikely my offline laptop has been compromised through USB transfer.