How do you separate your everyday Bitcoin setup from long-term storage?

[Cookdata]

It is preferable to be able to simply put what you want to spend in an exchange so that you don't have to spend what you intend to hold already.

Is "spending" here limited to swapping to fiat? If I'm buying VPN subscription with Bitcoin it doesn't seem to offer any benefit. Regardless of that though, saying that we should leave some coins on exchange to save fees seems a bit careless. It isn't that difficult to separate your coins into multiple wallets or devices if you wanted to. Fees only takes a fraction of your transaction. Unless you're a day trader where you can move lots of funds each day (which assume the majority isn't).

There is no single benefit of using an exchange to keep Bitcoin, you will likely spend much on fees if you use an exchange to send Bitcoin to external address than when you use custodial wallet to send. A simple segwit transaction with 1 input and 1 output with 1 sats will cost few penny cent but if you use an exchange, you are going to spend $1-$3 flat fee for Bitcoin transaction, where is the benefit of exchange of not for fiat and I don't think OP is looking for exchange in the first place.

The only reason why I think anyone will choose an exchange for hodl and everyday spending over custody is volatility, and most likely they don't like to hold Bitcoin because of volatility, they use stable coins, swap between fiat and sell to other vendors on p2p, that's the only reasonable options unless the person is a full time trader which is understandable.

[Filicius]

What is your regular use OP that makes you leave some coins in a hot wallet? I really want to know this because many people got it wrong, if you aren't buying and selling every day it makes no sense to leave some coins in your hot wallet.

There is absolutely nothing wrong in leaving a small amount of bitcoin in a hot wallet. Doesn't matter if you're not going to spend it in the next few weeks, as long as it is a small amount you can afford to lose, then that is okay.

I agree with you, Coyster. In my case, I hold a small amount in my smartphone, in different wallets (Apps) between LN and normal ones, for convenience when making small transactions. I am well aware that any day some misfortune could happen, although the loss or theft of the device would no longer be a concern because I keep the keys. Anyway, as you said, I have just enough not to lose sleep in case I lose that amount.

[L E G E N D A R Y]

It's preferable to go with what the OP suggested about having our daily expense funds in the hot wallet, instead of leaving it in a centralized exchange as you recommending, all for the reason of avoid transactions fees and what appears to be stress for some people having to transfer funds from their open source hot wallet to exchange for immediate use.  For me I rather pay the transaction fee which isn't any significant compared to the possible risk of leaving it in an exchange.

I believe one thing that actually gets people into trouble is focusing too much on the convenience of avoiding to pay a small fee, because this literally sometimes make them pay less attention to the the security trade offs, which is basically meant to be the most important thing. Only keeping the amount that’s you need for your regular spending on a hot wallet actually gives you more control over your funds. I sure wouldn’t mind paying some small fees just to guarantee my peace of mind and greater control, especially when the only alternative left with me is having ti entrust my funds to a third party, because that isn’t a risk I’m willing to take.

[CryptopreneurBrainboss]

In my case, I hold a small amount in my smartphone, in different wallets (Apps) between LN and normal ones, for convenience when making small transactions. I am well aware that any day some misfortune could happen, although the loss or theft of the device would no longer be a concern because I keep the keys. Anyway, as you said, I have just enough not to lose sleep in case I lose that amount.

You got everything covered but some people still combine their investments with their spending wallets and that's already a disaster waiting to happen as one mistake happens and everything is lost. I even see some still making the mistakes of having their seed phrase kept on their mobile devices (most people will deny this but that's just the reality) while others make use of custodial wallets, having no seed phrase to back up and they claim it's easier that way as they can spend Bitcoin easily or access it. Best precautions are taken now and everyone is encouraged to be using non custodial wallets for either hodling or spending Bitcoin.

[pawanjain]

keep most BTC in cold storage and only a small amount in a hot wallet for regular use.

For the online side, I also keep Bitcoin-related logins and sessions separate from my normal browsing. Sometimes I use separate browser profiles or an antidetect browser for that.

How far do you guys separate everything before it starts becoming overkill?

I like to keep it simple. One wallet for long term and one hot wallet for regular transactions. Multiple backups for both.
This should keep it simple and organized. We need not necessarily have separate wallets for different things.
Using separate browser profiles won't actually do anything, simply using a VPN should be sufficient.

[MusaPk]

You got everything covered but some people still combine their investments with their spending wallets and that's already a disaster waiting to happen as one mistake happens and everything is lost. I even see some still making the mistakes of having their seed phrase kept on their mobile devices (most people will deny this but that's just the reality) while others make use of custodial wallets, having no seed phrase to back up and they claim it's easier that way as they can spend Bitcoin easily or access it. Best precautions are taken now and everyone is encouraged to be using non custodial wallets for either hodling or spending Bitcoin.

Its written and discussed so many times on this forum that storing your seed on digital device is worst mistake one could make. A user who is active on this forum should not at least make this mistake of storing his seed digitally. This is a great practise to separate your spending wallet from the one you intend for long term investment. If your assets are in custodial wallets then keep in mind that exchange can cease them at any time, better use non-custodial wallet to have full control over your assets. These are small but critical measures we can take for security of our crypto assets.

[Audrey Simmons]

You got everything covered but some people still combine their investments with their spending wallets and that's already a disaster waiting to happen as one mistake happens and everything is lost. I even see some still making the mistakes of having their seed phrase kept on their mobile devices (most people will deny this but that's just the reality) while others make use of custodial wallets, having no seed phrase to back up and they claim it's easier that way as they can spend Bitcoin easily or access it. Best precautions are taken now and everyone is encouraged to be using non custodial wallets for either hodling or spending Bitcoin.

I understand how hard it is to teach people how to be wise, we can't force them to do what will be good for them. Losing our stacked portfolio is one of the painful things to go through after so much effort has been put into building a strong balance.

Using a non-custodial wallet is not enough guarantee that our assets are safe, even with the use of cold storage, there is still no guarantee, one wrong move can spoil the whole arrangement. It takes different security setups to stay protected from losing our Bitcoin.

[kawetsriyanto]

keep most BTC in cold storage and only a small amount in a hot wallet for regular use.

Yep. This is the right way to divide a long term holding and a short term holding of our Bitcoin. For the long term Bitcoin, I store to hardware wallets. Meanwhile for the short term holding, I store to hot wallets (sometimes in CEX wallets).

For the online side, I also keep Bitcoin-related logins and sessions separate from my normal browsing. Sometimes I use separate browser profiles or an antidetect browser for that.

What you mean with normal browsing?
It is a wise decision to separate the browser. Or you make a different profile in the browser.

How far do you guys separate everything before it starts becoming overkill?

Overkill?
I always separate anything needed, especially if it is related to the investment.
We must be always careful with investment data because the biggest risk is to lose anything if we manage it carelessly.

[PX-Z]

How far do you guys separate everything before it starts becoming overkill?

I have HW and desktop wallet where i only use rarely and put my holdings there, i just have the zpub kept for watch only address for real time notifications on my mobile. I also have different bitcoin mobile wallet that i regularly use. Aside from that, i have multi wallet for coins and tokens.

[boyptc]

It's not an overkill as long as you think that all of those separation of several wallets and balances is in your control and a way to increase your security.

For as long as you remember how you keep your assets in your way, that's not to be guilty of doing an overkill.

You do you and you're doing even better than the others who casually just put their assets into exchanges and believes that it's now more secure than self custody after the cold card fiasco.

[ultrloa]

You got everything covered but some people still combine their investments with their spending wallets and that's already a disaster waiting to happen as one mistake happens and everything is lost. I even see some still making the mistakes of having their seed phrase kept on their mobile devices (most people will deny this but that's just the reality) while others make use of custodial wallets, having no seed phrase to back up and they claim it's easier that way as they can spend Bitcoin easily or access it. Best precautions are taken now and everyone is encouraged to be using non custodial wallets for either hodling or spending Bitcoin.

I understand how hard it is to teach people how to be wise, we can't force them to do what will be good for them. Losing our stacked portfolio is one of the painful things to go through after so much effort has been put into building a strong balance.

Using a non-custodial wallet is not enough guarantee that our assets are safe, even with the use of cold storage, there is still no guarantee, one wrong move can spoil the whole arrangement. It takes different security setups to stay protected from losing our Bitcoin.

Don't teach people if they are not paying attention with recommendation or advice you give to them. You are just wasting your time explaining what are the best thing to do regarding on this matter, while they are continuing to use those risky wallets which they know.

If they lose then they cannot blame anyone, since at the end of the day. They are not the one executing those best options they could use to avoid such incidents.

After seeing the case happened on Coldcard. We can really point out that using non custodial wallet is not enough. People also need to pay close attention on how they set up their wallet, since this is the most crucial part and to make sure their wallet used is totally safe from any exploits.

[Die_empty]

It's not an overkill as long as you think that all of those separation of several wallets and balances is in your control and a way to increase your security.

For as long as you remember how you keep your assets in your way, that's not to be guilty of doing an overkill.

You do you and you're doing even better than the others who casually just put their assets into exchanges and believes that it's now more secure than self custody after the cold card fiasco.

There is no good reason to keep a substantial amount in a centralised exchange. I am aware that some traders do that because of ease of transactions. Some of these crypto traders believe that using reputable exchanges is safe. They keep referencing how depositors got repayment after some exchanges suffered hacks or bankruptcy.

Separating wallets is a must, considering that we don't need to expose our assets. Small amounts could be kept in centralised wallets while we take full charge of non-centralised wallets with large funds.

[MisFoxie]

I agree with you, Coyster. In my case, I hold a small amount in my smartphone, in different wallets (Apps) between LN and normal ones, for convenience when making small transactions. I am well aware that any day some misfortune could happen, although the loss or theft of the device would no longer be a concern because I keep the keys. Anyway, as you said, I have just enough not to lose sleep in case I lose that amount.

Then where do you keep your big money?.. it's normal to keep samll money in online device. Nothing will happen if your device got stolen you have your phrase, they can't access your wallet when it's protected by password.

I have HW and desktop wallet where i only use rarely and put my holdings there, i just have the zpub kept for watch only address for real time notifications on my mobile. I also have different bitcoin mobile wallet that i regularly use. Aside from that, i have multi wallet for coins and tokens.

Looks like you did the overkill, I don't consider mine as overkill because I don't use Hw. Maybe there are more overkill users or should i say super super overkill users but they didn't introduce themselves here.

[boyptc]

It's not an overkill as long as you think that all of those separation of several wallets and balances is in your control and a way to increase your security.

For as long as you remember how you keep your assets in your way, that's not to be guilty of doing an overkill.

You do you and you're doing even better than the others who casually just put their assets into exchanges and believes that it's now more secure than self custody after the cold card fiasco.

There is no good reason to keep a substantial amount in a centralised exchange. I am aware that some traders do that because of ease of transactions. Some of these crypto traders believe that using reputable exchanges is safe. They keep referencing how depositors got repayment after some exchanges suffered hacks or bankruptcy.

Separating wallets is a must, considering that we don't need to expose our assets. Small amounts could be kept in centralised wallets while we take full charge of non-centralised wallets with large funds.

Not only traders but those who have lost hope due to the cold card matter.

They think that there's no essence anymore for them to keep their funds to themselves. But they got it wrong, they are generalizing matters for most hardware wallets which is wrong.

But they have to see the other side of it that it's still best to keep it for themselves and if they like to keep some on exchanges, it's okay as long as it's insubstantial amount.

[Sulegzy39]

I feel that one aspect that gets people in trouble is that they concentrate too much on the advantages of not having to pay a tiny fee, because this causes them to pay less attention to the safety compromises, which are supposed to be the most essential issue. Keeping only the amount you require to cover regular spending in a warm wallet provides you more control into your finances.

I wouldn't mind paying a few tiny fees to ensure my piece of mind and more control, especially since the only option left to me is to entrust my cash to someone else, which is not a risk I am ready to take.

[Muskanrani]

I don't actually have a dedicated wallet for daily spending, but if I had to, and considering P2P is still too expensive in terms of fees and the underlying price, my best option would probably be using a CEX keeping the weekly average under $50, since my country prohibits using cryptocurrency for transactions. (yep, this applies specifically to my situation).
For long-term storage, I still use a cold wallet, along with Electrum as a "watch-only" wallet.

I also kept my long term Bitcoin which i hold for a long time i also keep it in my cold wallet but which i need for my daily use i keep them in Bitcoin exchange or when i need money i exchange it from P2P for a long time i am searching a source of exchaging my currency but today i read in your post CEX and i have no information about this and i wanted that you provide me information about it so that in future i will be able to use this .

[Nathrixxx]

I have seen some bitcoin investors that doesn't know how you could separate their assets from a long time investments from the one they are going to use over a short period of time, it's all begins with understanding the various wallet we have and why we should choose a particular one, our intention and plan towards every investment we are considering and the time frame or duration will intend to use over each investment with the strategy needed, all this will work towards how we could please ourselves on a better investment position with Bitcoin and have our long time assets being separated from the coins we may needed for other uses.

[Ojima-ojo]

In my case, I hold a small amount in my smartphone, in different wallets (Apps) between LN and normal ones, for convenience when making small transactions. I am well aware that any day some misfortune could happen, although the loss or theft of the device would no longer be a concern because I keep the keys. Anyway, as you said, I have just enough not to lose sleep in case I lose that amount.

You got everything covered but some people still combine their investments with their spending wallets and that's already a disaster waiting to happen as one mistake happens and everything is lost. I even see some still making the mistakes of having their seed phrase kept on their mobile devices (most people will deny this but that's just the reality) while others make use of custodial wallets, having no seed phrase to back up and they claim it's easier that way as they can spend Bitcoin easily or access it. Best precautions are taken now and everyone is encouraged to be using non custodial wallets for either hodling or spending Bitcoin.

For me I just have two separate wallets and I treat the separately.


1: is my custodial Wallet where all my Bitcoin investments I mean my long term Bitcoin holding are kept and seedphrase fully secured,. This Wallet I hardly connect to the Internet and making transfer from it.
2: I have my exchange wallet, this one is for my daily transactions and also my trading balance, I can make day to day transactions on the wallet for convinences, but I don't keep large amount of money on the exchange wallet, just enough for daily usage and trading.

[Gost ms]

I have seen some bitcoin investors that doesn't know how you could separate their assets from a long time investments from the one they are going to use over a short period of time, it's all begins with understanding the various wallet we have and why we should choose a particular one, our intention and plan towards every investment we are considering and the time frame or duration will intend to use over each investment with the strategy needed, all this will work towards how we could please ourselves on a better investment position with Bitcoin and have our long time assets being separated from the coins we may needed for other uses.

Yes you are right and I completely agree with you. But the method I like to use and I find it easy is this. When I find my discretionary income through proper financial management, I divide my discretionary income into several ways such as for short term investments, for long term investments, for emergency funds and for extra expenses. I like to divide my discretionary income in this way and when divided in this way it is very easy to combine everything and move forward.

Create a separate wallet for each and use the wallet accordingly when I do what I do. For example, for long term holdings, I will buy bitcoins and send them to that wallet. I will do the same for short term investments.

[BItcoin Guy@]

If you want to hold Bitcoin for long, the security of your wallet is very important, and we have all agreed that keeping our seed phrases safe offline is the best strategy to hold your Bitcoin in your wallets that your seed phrase is saved offline. Meanwhile if you have Bitcoin that you can be using most often, you can hold them in your non-custodial wallet, but if you will often use it by converting it to fiat, you would rather use a centralized exchange to hold the little amount of bitcoin you can usually use because living it in your non-custody wallet can expose you since you will always use your seed phrase to login into the wallet, and it will have access to internet, therefore, in my opinion, saving should be gold in such wallet, while the once that can be used anytime you will need to trade or convert to fiat.

Holding bitcoin for long or short term, we just need to keep our wallet safe and secure our seed phrase so our bitcoin will be protected in the wallet always. Some people keep their bitcoin in exchanges since they will be using it term to term and it's easy to convert to fiat. And if you want to keep it for the long term, you can keep it in a strong wallet so that no one can get access to it. Everyone will have different opinions on how to set up their bitcoin, but for me, I just convert my coins to USDT in the exchange, turn it to fiat, and my bitcoin always stays safe in my wallet till I reach my target before selling it out.