Do I really need a Bitcoin wallet?

[D_Thomas]

Been mining a few months with my PC's GPU and up to 8 coins now. My Jalapeno arrived today so I should be getting coins much quicker. Now that I'm actually starting to get some decent cash, I don't want to lose it.

I'm wondering what is best way to manage the coins. Now the coins I mine I simply have the mining pool send to my account at Mt.Gox. Is that a bad idea? I figure there is a much higher chance of me screwing something up on my end with a bitcoin wallet than Mt.Gox screwing something up.

Appreciate any advice on using a bitcoin wallet vs just keeping coins at an exchange place. Thanks!

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[Kluge]

At least use something like Blockchain.info where you could recover the coins in case they disappeared, had all funds seized, etc.

Exchanges really shouldn't be used for storage of coins. Fwiw, the bitcoin clients in the wild are pretty user-friendly. You might want to consider testing out a lite client like Electrum, which offers a good amount of security without needing the blockchain which is a huge PitA to download and maintain if you aren't a power-user (that said, Electrum does offer a fair number of power-user options, but you don't need to use them).

Just make sure you back up and encrypt your wallet, and you'll probably be fine. Ideally, if you have a substantial collection of coins, move everything BTC-related to an offline computer. Armory (and I'm sure others, by now) offers great options for offline wallets, though Armory does require DLing/maintaining the blockchain and a shit-load of RAM on your PC (8GB+ is essential - 6GB or less is risking it crashing unless you're using a very resource-lite OS without other programs running).

Multibit's a great compromise between a full and lite client because it well-utilizes a technology called SPV, but I'm not capable of explaining its differences well to you. You might want to check out the options available @ http://bitcoin.org/en/choose-your-wallet if someone else doesn't chime in with a more detailed explanation.

I'd very strongly recommend against keeping funds on Gox, though - whatever route you end up taking. You'd never want to hold a substantial number of coins there longer than absolutely necessary, and that goes for just about every exchange and web wallet you can't A) extract your private keys from - and B) verify doesn't have access to your coins

[DeathAndTaxes]

Been mining a few months with my PC's GPU and up to 8 coins now. My Jalapeno arrived today so I should be getting coins much quicker. Now that I'm actually starting to get some decent cash, I don't want to lose it.

I'm wondering what is best way to manage the coins. Now the coins I mine I simply have the mining pool send to my account at Mt.Gox. Is that a bad idea? I figure there is a much higher chance of me screwing something up on my end with a bitcoin wallet than Mt.Gox screwing something up.

Appreciate any advice on using a bitcoin wallet vs just keeping coins at an exchange place. Thanks!

If your coins are at MtGox (or anywhere you don't have the private key) then you don't have ANY Bitcoins.   MtGox has your Bitcoins and MtGox has given you an IOU which you can see on your account page.  If MtGox disapears, gets sued into oblivion, gets hacked, has their servers seized by the Japanese govt, etc then THEIR coins are gone and the IOU is worthless.

Now for some people this risk is acceptable only you can decide.  If having an IOU from a company you know almost nothing about on the other side of the planet where if they don't pay you have almost no recourse to recover your funds "good enough"?  If yes then sure you don't need a wallet.

[Jan]

1) Generate a key-pair
2) Put the private key and bitcoin address on paper (keep paper, delete the rest)
3) Mine to the address

Finally monitor your balance: http://blockchain.info/address/<insert bitcoin address>

Then you don't need a wallet until you want to spend.

There are several ways to do 1 & 2 in a secure way, here is one:
http://www.youtube.com/watch?v=milxhe-RoCI

[Chef Ramsay]

At least use something like Blockchain.info where you could recover the coins in case they disappeared, had all funds seized, etc.

My friend, who's a noob like me, had his 5 BTC taken out of his Blockchain wallet a few days ago by some random address and he's worried to ever use bitcoin again even tho he still likes it. He's notified Blockchain about the situation but afaik hasn't heard back from them. Any likelihood that he'll get them back? I can't figure out how it happened but he said he bought like 1.7 BTC a day before the incident and then woke up the next day and his phone app (which is all he uses) showed a 0 balance. He uses 2-factor authentication, as do I, yet he still got sniped. I immediately checked my balance and was thankful to see everything was fine. Any insight?

[acoindr]

If you are long-term storing more coins with ANY service than you can afford to lose you are storing too much there. DeathAndTaxes above is right. A service may lose your coins not from dishonesty, but from something unforeseen.

That said people themselves also lose coins because it's still tricky to secure them. It takes time to learn/devise the best method for your personal use case, and the less tech savvy you are the more likely you'll make some mistake.

That being the case I recommend at the very least spreading your coins out. For example, services which seem to have decent record of holding coins responsibly are Mt.Gox, Blockchain.info, Coinbase.com and CampBX. One strategy you might use is spreading coins out among different reputable services, and storing some yourself. That way you should never lose the majority of your coins at once. As you become more confident in your own ability move more coins into your private storage method.

[Elwar]

1) Generate a key-pair
2) Put the private key and bitcoin address on paper (keep paper, delete the rest)
3) Mine to the address

Finally monitor your balance: http://blockchain.info/address/<insert bitcoin address>

Then you don't need a wallet until you want to spend.

There are several ways to do 1 & 2 in a secure way, here is one:
http://www.youtube.com/watch?v=milxhe-RoCI

This. You can be creative as you want on how you preserve the private key. Treat it like the combination to your safe.

[greyhawk]

You don't NEED a wallet, you can just store your coins in mine.

[CurbsideProphet]

Been mining a few months with my PC's GPU and up to 8 coins now. My Jalapeno arrived today so I should be getting coins much quicker. Now that I'm actually starting to get some decent cash, I don't want to lose it.

I'm wondering what is best way to manage the coins. Now the coins I mine I simply have the mining pool send to my account at Mt.Gox. Is that a bad idea? I figure there is a much higher chance of me screwing something up on my end with a bitcoin wallet than Mt.Gox screwing something up.

Appreciate any advice on using a bitcoin wallet vs just keeping coins at an exchange place. Thanks!

If your coins are at MtGox (or anywhere you don't have the private key) then you don't have ANY Bitcoins.   MtGox has your Bitcoins and MtGox has given you an IOU which you can see on your account page.  If MtGox disapears, gets sued into oblivion, gets hacked, has their servers seized by the Japanese govt, etc then THEIR coins are gone and the IOU is worthless.

Now for some people this risk is acceptable only you can decide.  If having an IOU from a company you know almost nothing about on the other side of the planet where if they don't pay you have almost no recourse to recover your funds "good enough"?  If yes then sure you don't need a wallet.

This.  I would be VERY wary of MtGox right now.  See the service discussion of this forum for the amount of people with problems getting their money out.  If you're going to store coins for the medium to long-term, I would put them on a paper wallet or via Armory's offline option.  You can put some smaller spending coin amounts in a hot wallet like Blockchain.info, Electrum or whatever you prefer. 

[acoindr]

This.  I would be VERY wary of MtGox right now.  See the service discussion of this forum for the amount of people with problems getting their money out.  ...  

Just to clarify these are people having delays with the banking side of MtGox transfers, which MtGox made an announcement about. As far as I know nobody has had problems transferring bitcoins.

[westkybitcoins]

1) Generate a key-pair
2) Put the private key and bitcoin address on paper (keep paper, delete the rest)
3) Mine to the address

Finally monitor your balance: http://blockchain.info/address/<insert bitcoin address>

Then you don't need a wallet until you want to spend.

There are several ways to do 1 & 2 in a secure way, here is one:
http://www.youtube.com/watch?v=milxhe-RoCI

You know, I had a more complicated two-wallet routine all written out for the OP to use. But after re-reading, thinking a bit, and seeing this, I'm just going to say Jan is probably right in that this is all you need.

I'd only add a few points:

- Keep your private key and address in a safe, secure place
- Make at least one copy of the private key and address, and keep it in a separate safe place

Here's a thread that touches on how to make a paper wallet:

https://bitcointalk.org/index.php?topic=213342.0

There's also an Android app, Bitcoin Address Utility Tool, that can help if you have an old smartphone or tablet that you don't keep online constantly. Just jump on wifi, download it, then disconnect before running. If you choose to use it, it requires a passphrase, but I would strongly recommend not trying to make a passphrase you can remember. Instead make it a very long, random string of letters, numbers and symbols that you carefully write down later along with the private key and address.

[cp1]

If you don't want to spend the coins then you can keep a secret key as described above.  But if you want to spend them and want a very secure way to store them then check out my guide:
https://bitcointalk.org/index.php?topic=235584.0

[D_Thomas]

Thanks for all the tips and links. Will be going over all of them this weekend.

Kind of freaks me out the nothingness of all of this where if something goes wrong, you can lose it all forever.

Yesterday I downloaded Multibit. It works so much better than the wallet I downloaded about 10 months ago. My old wallet took HOURS to synchronize. Multibit took a few seconds.

Dumb newbie question: If I export the privacy key from Multibit, can I use that key with any another wallet that is not the Multibit wallet? I downloaded Multibit on two laptops. Then exported the key from one laptop and used it to access my money on the other one. It worked so that gave me a bit of a sense of security that if my hard drive crashed on one computer I could still get my money using the other one. But still confused. Is the key generated by wallet programs all you need to get your money from any wallet app as long as you have the key written down? If that is the case I feel better but still takes some faith to put any significant amount of cash out there.

[westkybitcoins]

Thanks for all the tips and links. Will be going over all of them this weekend.

Kind of freaks me out the nothingness of all of this where if something goes wrong, you can lose it all forever.

Yesterday I downloaded Multibit. It works so much better than the wallet I downloaded about 10 months ago. My old wallet took HOURS to synchronize. Multibit took a few seconds.

Dumb newbie question: If I export the privacy key from Multibit, can I use that key with any another wallet that is not the Multibit wallet? I downloaded Multibit on two laptops. Then exported the key from one laptop and used it to access my money on the other one. It worked so that gave me a bit of a sense of security that if my hard drive crashed on one computer I could still get my money using the other one. But still confused. Is the key generated by wallet programs all you need to get your money from any wallet app as long as you have the key written down? If that is the case I feel better but still takes some faith to put any significant amount of cash out there.

Totally understand the concern about putting your faith in an ethereal nothingness used as money. The dirty secret of modern society though, is that nearly all money (and paper assets!) is the same thing... bits in a computer somewhere. Backed up, maybe, but you can do backups too.

Which brings me to the important point of your post: that the private key is the means of accessing your money.

Some wallets are very simple, and don't allow you to import keys (BitcoinSpinner, a slick Android wallet, comes to mind.) But many will, and even if you couldn't get to one, as long as you have the private key, if you *had* to, you could write out a transaction to move your money by hand and push it to the bitcoin network. It's real, true digital cash.

The downside of course, being that just like cash, you have to secure it yourself. You'll want to make sure you backup your main wallet ASAP!

But... importing your key from one wallet to another like that isn't really recommended. If you spend from one wallet, then later look at the other, you might wonder why THAT wallet's balance looks wrong. It was a good way to prove the concept though. (It's probably a good idea now to either wipe that second wallet, or remove the key you imported from it, to avoid confusion.)

EDIT: Also, in case it wasn't clear, most wallets contain more than one private key, they may have hundreds. Usually when you spend bitcoins, you get change that automatically goes to one of your other address-key pairs. It's not complicated, but does take some learning and some caution if you plan to mess with private keys inside of your wallets.

[DeathAndTaxes]

Thanks for all the tips and links. Will be going over all of them this weekend.

Kind of freaks me out the nothingness of all of this where if something goes wrong, you can lose it all forever.

Yesterday I downloaded Multibit. It works so much better than the wallet I downloaded about 10 months ago. My old wallet took HOURS to synchronize. Multibit took a few seconds.

Dumb newbie question: If I export the privacy key from Multibit, can I use that key with any another wallet that is not the Multibit wallet? I downloaded Multibit on two laptops. Then exported the key from one laptop and used it to access my money on the other one. It worked so that gave me a bit of a sense of security that if my hard drive crashed on one computer I could still get my money using the other one. But still confused. Is the key generated by wallet programs all you need to get your money from any wallet app as long as you have the key written down? If that is the case I feel better but still takes some faith to put any significant amount of cash out there.

For multibit specific questions you likely will get better responses in multibit thread in alternative wallets section of the forum.  I would answer but I have never used it so I don't have a clue.

[cp1]

You can always export the private key to another wallet.  But sometimes you get a compressed private key which isn't compatible with all wallets.   It doesn't really matter though -- when you reinstall just reinstall the same wallet you were using.

[jim618]

Thanks for all the tips and links. Will be going over all of them this weekend.

Kind of freaks me out the nothingness of all of this where if something goes wrong, you can lose it all forever.

Yesterday I downloaded Multibit. It works so much better than the wallet I downloaded about 10 months ago. My old wallet took HOURS to synchronize. Multibit took a few seconds.

Dumb newbie question: If I export the privacy key from Multibit, can I use that key with any another wallet that is not the Multibit wallet? I downloaded Multibit on two laptops. Then exported the key from one laptop and used it to access my money on the other one. It worked so that gave me a bit of a sense of security that if my hard drive crashed on one computer I could still get my money using the other one. But still confused. Is the key generated by wallet programs all you need to get your money from any wallet app as long as you have the key written down? If that is the case I feel better but still takes some faith to put any significant amount of cash out there.

You can export your private keys from MultiBit using the 'Tools | Export Private Keys'. Check out the help on it:
https://multibit.org/en/help/v0.5/help_exportingPrivateKeys.html

If your peruse the Help Contents there are a few posts (in the 'More technical details' section near the bottom) about private keys.

I have both my blockchain.info wallet and Android Bitcoin Wallet 'cloned' into MultiBit wallets.

I have also recently added a section on Wallet Backups in the help. As you mention, they would certainly help in case of a hard drive crash or laptop theft etc. The help is here:
https://multibit.org/en/help/v0.5/help_walletBackups.html

[Anon136]

here ill tell you what i did:

• go to bitaddress.org and save page as
• boot linux from a disk (do not connect to the internet)
• run bitaddress.org.htm and generate a paper wallet
• hook your computer up to a printer with a usb cable
• print out several copies of the paper wallet
• clear printer cache
• laminate the paper wallets and throw um in the safe or hide um really well or both
• then just send all the coins that you want to keep safe to that address and keep your spending coins on gox or multibit

with this technique there is basically no risk of any significant portion of my coins ever being stolen by a hacker or lost due to counter party risk

[acoindr]

Geez, we've got to make this simpler. No way Joe Average is going to do this.

[cp1]

Hardware wallets are coming soon, that should help.  But, the average Joe gets his identity /cc info / pension / savings / etc stolen all the time and is left with a permanent loss, so it's not totally different.