Safest way of long term holding

[qwewsx]

I am considering holding Bitcoin for the long term. I have learned a few basics about the blockchain and BTC mechanisms, but still unable to find a complete guide on how to safely store bitcoin.

1) How to generate a private key safely? Online tools are obviously undesirable as they might keep a back door on all keys generated. Similar reason for any library or packages even they operate offline (I cannot check if these keys generated are in fact following some predetermined sequence).

I can use a random number generator on an offline PC. But I am not a real 'hacker' and have concerns on whether any programming language can produce truly random numbers that cannot be reproduced (or say predicted) on another PC. They might all rely on some external factors (such as time) which greatly reduce the possible key generated and make brutal force algorithms possible.

Currently, I can only think of throwing dice for key generating but that cannot scale.

2) I do not want to use any 3rd party software as a wallet. Suppose I just store my private key on a piece of paper and later transfer coins into it using exchanges. Would that be a valid transaction and allows me later to spend these coins? Is there anything else I need to store together with the private key (like the hashed transaction number in transaction_input in the blockchain? ScriptSig?) I really want to avoid 3rd party software because it might be obsolete in the future and data can be degraded. (Say if I use some sophisticated cold wallet, I may experience hardware degradation in  10 yrs, no one at that time used this software, programmers 10 yrs ago cannot be reached, and any trick in coding or encoding in the original version becomes obsolete. I would be a consumer rather than an investor of BTC...)
 
Any advice?

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[DannyHamilton]

I am considering holding Bitcoin for the long term. I have learned a few basics about the blockchain and BTC mechanisms, but still unable to find a complete guide on how to safely store bitcoin.

1) How to generate a private key safely? Online tools are obviously undesirable as they might keep a back door on all keys generated. Similar reason for any library or packages even they operate offline (I cannot check if these keys generated are in fact following some predetermined sequence).

I can use a random number generator on an offline PC. But I am not a real 'hacker' and have concerns on whether any programming language can produce truly random numbers that cannot be reproduced (or say predicted) on another PC. They might all rely on some external factors (such as time) which greatly reduce the possible key generated and make brutal force algorithms possible.

Currently, I can only think of throwing dice for key generating but that cannot scale.

2) I do not want to use any 3rd party software as a wallet. Suppose I just store my private key on a piece of paper and later transfer coins into it using exchanges. Would that be a valid transaction and allows me later to spend these coins? Is there anything else I need to store together with the private key (like the hashed transaction number in transaction_input in the blockchain? ScriptSig?) I really want to avoid 3rd party software because it might be obsolete in the future and data can be degraded. (Say if I use some sophisticated cold wallet, I may experience hardware degradation in  10 yrs, no one at that time used this software, programmers 10 yrs ago cannot be reached, and any trick in coding or encoding in the original version becomes obsolete. I would be a consumer rather than an investor of BTC...)
 
Any advice?

Bitcoin is an open source protocol.  ALL bitcoin software is "Third Party Software", unless you are going to do all of your computations with paper and pencil, you're going to have to use third party software of some sort.

If you are concerned that the method you use for key storage and for address generation may not be supported in the future, then along with your key information, you should store instructions for yourself on how to use that information.

Your best bet for generating trustable "random" data if you want to go to extremes is to roll dice.  You'll want a consistent method of rolling the dice, and a consistent method of determining which order to read the dice so that your human biases don't come into play.

After you've the dice enough times to collect 256 bits of entropy, you'll convert the dice into a Hierarchial Deterministic master private key. That way you can have as many addresses as you like, while only needing to go through the dice process the one time.  For the safest storage, you'll want to convert that Hierarchial Deterministic master private key into a 24 word recovery seed phrase.  If you are concerned that the "seed phrase" process may change (or go away) in the future, then you'll want to make sure that, along with the phrase, you store instructions on the process of converting the seed phrase back to a numeric master private key.

Once you've got your master private key encoded in a recovery seed phrase (along with instructions on how to convert back to the numerical value), the next thing you'll want to do is use the BIP-44 process to generate addresses. Again, you'll want to make sure you store enough information that you'll be able to repeat the BIP-44 process in the future just in case it is no longer a common process and you can't find any software that will do it for you.

There is currently open source software that will perform both of these processes for you, for example: https://github.com/iancoleman/bip39

However, that software may not be available in the future, or may not run in whatever environment you have access to. This is why I suggest making sure that you:
1. Understand these processes so you can re-create them (by hand if necessary).
and
2. Store instructions with the keys that explain how to perform these processes (in case you forget some of the finer details).

[rosenbauer02]

The safest way to store btc are those cold storage. The hardware wallet would be the best example. However, obtaining hardware wallet like ordering it online would still not suffice to get the safety of your btc holdings.

In my opinion storing btc in an offline device like computer would be more safe having installed offline wallet in it. You should not afraid to trust this process and should not be anxious as what you have mention that it might be brute force by anybody wishes to gain access in it. The possibilities of having the access to your computer are only your family member or people living in the same roof and they can be more trusted more than anyone else.The computer system also can have added security features like securing it with password on specific drive where your btc keys are being stored.

The most important thing that you should have when you store your btc are they keys that include its seed phrase in which all keys can be disclose just by the seed phrase alone. This is all that matter and do not get too much worries on everything that might hinder you to get more btc in the future. Just remember the phrase "not your keys, not your bitcoin". So take good care of seed phrase and the keys to your btc holdings.

[Kittygalore]

The safest way to store btc are those cold storage. The hardware wallet would be the best example. However, obtaining hardware wallet like ordering it online would still not suffice to get the safety of your btc holdings.

In my opinion storing btc in an offline device like computer would be more safe having installed offline wallet in it. You should not afraid to trust this process and should not be anxious as what you have mention that it might be brute force by anybody wishes to gain access in it. The possibilities of having the access to your computer are only your family member or people living in the same roof and they can be more trusted more than anyone else.The computer system also can have added security features like securing it with password on specific drive where your btc keys are being stored.

Cold storage is more recommended to be honest just don't lose the needed credentials to access the wallet because you will be waiting for nothing. Storing it in a computer is advisable but given the lifespan of many computers, I don't think that it will be best for the long term because there might come a time when the computer gets broken either by accident or wear and tear, I highly discourage storing in computers, especially if the computer is not a brand new one and you are always clicking suspicious links.

[UserU]

Have you considered storing your Bitcoin on an interest account? You earn daily/ weekly/ monthly interests rather than letting it sit idle.

And if you are concerned about fraud, those service providers are insured.

[traderethereum]

You can buy a hardware wallet such as Ledger Nano or Trezor and start moves your bitcoin to that wallet.
Follow the company's guide or the manual from the hardware before moving your bitcoin and read about how to protect your wallet from other people who want to steal your bitcoin.
As long as you do not tell people around you about having bitcoin and the hardware, you are safe because they do not even think about you have bitcoin.
Make sure you save the hardware wallet in the safest place that only you that will know.
Make a backup for your private keys, so you can recover the wallet and get your funds if something happens.
Finally, you should not feel too worried or freak about the hacker, the scammer, or others and make it as simple as you can, so you will not think that saving bitcoin will be too complicated.

[DannyHamilton]

The safest way to store btc are those cold storage. The hardware wallet would be the best example.

How sure are you that the hardware wallet will still work 20 years later?  How sure are you that computers 20 years from now will still use the same connectors? How sure are you that the wallets will still support 20 year old hardware wallets?  This does not sound like a reliable solution to me.

In my opinion storing btc in an offline device like computer would be more safe

You think that computer and storage will still be running 20 years later?  You are willing to risk what might be millions of dollars on that possibility?

You should not afraid to trust this process and should not be anxious

You should ABSOLUTELY be afraid to trust and be anxious when your bitcoin might be worth millions of dollars in 20 or 30 years, and you need a storage that will last that long.

The possibilities of having the access to your computer are only your family member or people living in the same roof

And any criminals that break in, or any visitors that come to your house, or any workers (plumbers, electricians, delivery, installation, etc).  Also any government officials (police?) that decide to investigate your home.

and they can be more trusted more than anyone else.

It's cute that you are so naive. Not everybody has trustworthy friends or relatives.  Some people are stuck living with criminals or addicts.

The computer system also can have added security features like securing it with password on specific drive where your btc keys are being stored.

And if you forget the password after a few years?

all keys can be disclose just by the seed phrase alone.

What if the "standard" method of seed phrase generation changes? Then how do you use your seed phrase?  You would need to find OLD software from 20 years before that can still run on the modern computer.

This is all that matter and do not get too much worries on everything that might hinder you

There are many stories of many people that lost access to millions of dollars of Bitcoin because they "did not get too much worries on everything that might hinder them".

Cold storage is more recommended to be honest just don't lose the needed credentials to access the wallet because you will be waiting for nothing.

Credentials are not enough.  You need to know how to use those credentials.

Storing it in a computer is advisable but given the lifespan of many computers, I don't think that it will be best for the long term because there might come a time when the computer gets broken either by accident or wear and tear,

So it is advisable? Or it is not advisable?  You say both.  This is very confusing.

I highly discourage storing in computers, especially if the computer is not a brand new one and you are always clicking suspicious links.

Ah, ok. Not advisable.  Thank you for pointing out what not to do.  This is not every helpful in answering the question of what to do.

Have you considered storing your Bitcoin on an interest account? You earn daily/ weekly/ monthly interests rather than letting it sit idle.

Well now, that certainly sounds like a scam.

And if you are concerned about fraud, those service providers are insured.

Well, I'm glad you cleared that up.  Then again, that is what a scammers would say, isn't it?

You can buy a hardware wallet such as Ledger Nano or Trezor and start moves your bitcoin to that wallet.

And in 20 or more years, when that wallet company has gone out of business, if that hardware wallet doesn't work, what do you do then?  This does not sound like a reliable long-term solution.

[Kakmakr]

I have to agree with you that a 3rd party wallet provider for long term storage is not an option for me too. The constant updates and upgrades and firmware upgrades on hardware wallets is a total pain in the ass.  

I created "Paper wallets" on a air-gapped computer and I have used it for MANY years without any problem. Unfortunately I had to use 3rd party Open source software to create it, but as I said.. I have had no problems with it. Use bitaddress.org A Open Source JavaScript Client-Side Bitcoin Wallet Generator. (You can download the Github source code or just the whole script from the website to do it off-line)

Suggestion : Make several copies of the paper wallets and laminate them. (Store in different geographical locations)  

[Charles-Tim]

1) How to generate a private key safely?

With your explanation, I think you are guru enough to generate private key safely. There are different methods of doings this, you can decide to use a paper wallet website offline, like bitaddress.org in case you want to hold, you can decide to download electrum on airgapped device to generate it, you can decide to use a multisig wallet, you can decide to buy hardware wallets like trezor which is completely open source and private key generation on it is offline.

2) I do not want to use any 3rd party software as a wallet.

Like electrum, it is open source, there are ways you can even run it offline, trezor is also offline wallet. If a wallet is open source and its source code is available to the public, I think this is sufficient enough to trust the wallet.

Suppose I just store my private key on a piece of paper and later transfer coins into it using exchanges. Would that be a valid transaction and allows me later to spend these coins?

Yes, it will be a valid transaction, but making sure you track the transaction on blockchain to be certain that the transaction is valid and confirmed.

Is there anything else I need to store together with the private key (like the hashed transaction number in transaction_input in the blockchain?

It depends, if it is seed phrase you generated using wallet, the seed phrase is enough. If it is extended with passphrase, you will need to make a backup of the passphrase. If it is private key that was generated, and you encrypted it with BIP38 passphrase, you will need to backup the password used for the encryption.

(Say if I use some sophisticated cold wallet, I may experience hardware degradation in  10 yrs, no one at that time used this software, programmers 10 yrs ago cannot be reached, and any trick in coding or encoding in the original version becomes obsolete. I would be a consumer rather than an investor of BTC...)

Not your wallet that matters in this regard, what matters are your backup, your seed phrase or private key can recover back your wallet even on another wallet devices.
What I think matter most is for means of private key generation to be open source, if you are expert enough, you can run iamcoleman offline for this purpose. Bitaddress.org is open source, electrum can be run on airgapped device and yet open source.

[pooya87]

the next thing you'll want to do is use the BIP-44 process to generate addresses.

Don't you mean BIP-32? BIP-44 is just suggesting a certain derivation path to be used by wallets not the algorithm to derive the child keys (and their corresponding addresses).
We have a couple of other similar BIPs defining standard derivation paths such as BIP-49 and BIP-84

[electronicash]

of you can use the old school https://bitcoincore.org/en/download/ just save your private keys and store your coins for a long period of time. there were rumors that if you make a transaction using the same address you use to conduct a transaction, it would mean your public key will b exposed and that a quantum computer might just be a threat and can also expose your private key. not sure if it's possible but store your coins and not use the wallet afterward. not even once.

[DannyHamilton]

the next thing you'll want to do is use the BIP-44 process to generate addresses.

Don't you mean BIP-32? BIP-44 is just suggesting a certain derivation path to be used by wallets not the algorithm to derive the child keys (and their corresponding addresses).

I suppose I meant both.

Need a derivation path to derive all the keys, but also need to be able to generate the addresses from those keys for use in receiving the bitcoins.

[UserU]

-Snip-

I was referring to financial institutions that offer such services such as Celsius Network, Blockfi and the Nexo.

Are you saying that those entities are a scam?

[DannyHamilton]

I was referring to financial institutions that offer such services such as Celsius Network, Blockfi and the Nexo.

Are you saying that those entities are a scam?

I'm saying that if you don't have sole control over the private keys associated with bitcoins, then you don't have the bitcoins.

In the scenario you are describing, what you have is a promise from someone else that they will spend THEIR bitcoins in the way that you ask them to.  It's up to each individual to decide just how much trust and faith they want to put into any particular entity making such a promise. Will the entity be hacked?  Will your account at the entity be hacked?  Will the entity file bankruptcy?  Will the government shut down the entity? Will the government confiscate the entity's assets? Will the insurance company have enough assets to cover 100% of any losses?  Will ANY and ALL losses be covered by the insurance company, or are there conditions that must be met?

You can put your faith in promises if you like.  I prefer to put my faith in bitcoins.

[UserU]

I'm saying that if you don't have sole control over the private keys associated with bitcoins, then you don't have the bitcoins.

In the scenario you are describing, what you have is a promise from someone else that they will spend THEIR bitcoins in the way that you ask them to.  It's up to each individual to decide just how much trust and faith they want to put into any particular entity making such a promise. Will the entity be hacked?  Will your account at the entity be hacked?  Will the entity file bankruptcy?  Will the government shut down the entity? Will the government confiscate the entity's assets? Will the insurance company have enough assets to cover 100% of any losses?  Will ANY and ALL losses be covered by the insurance company, or are there conditions that must be met?

You can put your faith in promises if you like.  I prefer to put my faith in bitcoins.

I agree with your first statement. Not your keys, not your Bitcoins.

Of course there's risk to such as it's happened before but it's a suggestion in case the OP might be interested. I myself have parked my coins with such FI and have enjoyed the yielded interests. Unlike normal FD accounts with stricter tenure (e.g. 3 months), the terms are way more flexible.

So let's agree to disagree.

[Charles-Tim]

Of course there's risk to such as it's happened before but it's a suggestion in case the OP might be interested. I myself have parked my coins with such FI and have enjoyed the yielded interests. Unlike normal FD accounts with stricter tenure (e.g. 3 months), the terms are way more flexible.

So let's agree to disagree.

There is nothing to disagree about here, OP wants a wallet that he generates himself, not about staking for interest on crypto custodial service companies, these services can not be discouraged, but does not fulfill the purpose of bitcoin which is privacy.

[UserU]

There is nothing to disagree about here, OP wants a wallet that he generates himself, not about staking for interest on crypto custodial service companies, these services can not be discouraged, but does not fulfill the purpose of bitcoin which is privacy.

I was actually referring to Danny's statement.

But yeah, it was just a suggestion.

[bits4books]

There are a lot of tools for offline generation of paper wallet. You could even disable internet on you computer to do is safier. Or use one-time VM for generation of keys

[NotATether]

I have heard of the Glacier protocol (https://glacierprotocol.org/) for storing bitcoins in cold storage which involves a couple laptops and USB sticks. I don't know how secure it is though, because I have never tried it (and most people here aren't in a position to order $1200 worth of computer equipment just for this task since it requires factory-restored devices).

There were rumors that if you make a transaction using the same address you use to conduct a transaction, it would mean your public key will b exposed and that a quantum computer might just be a threat and can also expose your private key. not sure if it's possible but store your coins and not use the wallet afterward. not even once.

They are not rumors. They are real.

Right now I can download Pollard's Kangaroo program from Github and use it to break private keys searched in small (<60) ranges. A cluster of several dozen GPUs can break private keys with ranges as high as 115 bits.

Actually the public key isn't even needed, the same GPU clusters can theoretically brute-force RIPEMD160 hashes (ie. your address) with smaller-sized ranges.

There are a lot of tools for offline generation of paper wallet. You could even disable internet on you computer to do is safier. Or use one-time VM for generation of keys

Paper wallets are complicated to set up and too easy to make a mistake while printing/engraving the private key. What happens after that is you forget or lose a couple characters of the private key.

Paper wallet generator sites have never been secure (cf. BitcoinPaperWallet) and you never know when or if they'll be sold to somebody malicious.

[khaled0111]

Is there anything else I need to store together with the private key (like the hashed transaction number in transaction_input in the blockchain? ScriptSig?)

No, all you have to store and keep safe is your private key. All other information related to transactions like their hashes, inputs... will be saved on the blockchain (publuc ledger) so you don't have to worry about them.
However, you should consider saving the public address related to that private key as well. You don't want to have to derive it each time you request a payment or check your balance!