How Bitcoin Was Originally Stored

[EstherBtc]

I decided to do some research on how bitcoin was stored before now and i discovered that When Bitcoin launched in 2009, there was no app store, no Coinbase, and no physical hardware device designed for crypto.
Everything centered around the original software built by Satoshi Nakamoto initially called Bitcoin Qt, later known as Bitcoin Core.

​The wallet.dat File: When you ran the original Bitcoin software on your desktop computer, it downloaded the blockchain and automatically generated a local file named wallet.dat. This single file held your private keys. If the file corrupted or the hard drive died, your funds vanished. Except you backed it up somewhere else like another computer, flash drive or hard drive.

No Seed Phrases (BIP-39): Modern 12 or 24 word recovery phrases didn’t exist yet. Backups meant manually copying your wallet.dat to a USB stick, burning a CD, or printing out raw strings of alphanumeric private keys (early "paper wallets").
https://thaibitcast.com/en/blogs/articles/the-history-and-evolution-of-cryptocurrency-wallets?hl=en-US#:~:text=In%20the%20early%20days%2C%20we%20did%20not,were%20lost%2C%20access%20would%20be%20permanently%20denied.

Early Exchanges Evolved Out of Necessity:
As people wanted to trade Bitcoin, early platforms like Mt. Gox popped up around 2010. Leaving coins on early exchanges was notoriously risky, and many users learned harsh lessons when those platforms were hacked or collapsed.
https://thaibitcast.com/en/blogs/articles/the-history-and-evolution-of-cryptocurrency-wallets?hl=en-US#:~:text=Mt.%20Gox%20pioneered%20custodial%20wallet%20services%20starting,custodial%20wallets.%20Desktop%20wallets%20and%20non%2Dcustodial%20development.

Abeg, how do you see this custody thing now? Are we rushing too much for convenience and handing our keys to centralized platforms, or do we actually need these easier tools?

[DubemIfedigbo001]

​The wallet.dat File: If the file corrupted or the hard drive died, your funds vanished.

If you still have the private keys written down somewhere correctly, you can still import it into another wallet instance and your funds would still be there, this is why more emphasis are placed on backing up your private keys properly and offline because with it, you can have access to your funds anytime any day.

[coinlary]

​The wallet.dat File: When you ran the original Bitcoin software on your desktop computer, it downloaded the blockchain and automatically generated a local file named wallet.dat. This single file held your private keys. If the file corrupted or the hard drive died, your funds vanished. Except you backed it up somewhere else like in a paper or something.

You can't backup a .data file on a paper , it can only be stored digitally. On the other hand you can make use of paper wallet which can be easily backed up as it only contain a private key and the corresponding pub. address

Abeg, how do you see this custody thing now? Are we rushing too much for convenience and handing our keys to centralized platforms, or do we actually need these easier tools?

Which easier tools?

Self-custody isn't really that hard once you understand it. What people are afraid of is taking responsibility for their own money. The only challenging part I can think of for most people would be setting up cold storage if they want to completely go off the grid. Using a non-custodial wallet itself isn't that hard.

[MainIbem]

That's to let people know how vulnerable exchanges have been from the unset and never to be trusted, if the first exchange since back then was hacked and exchanges now haven't found solutions to deal with hackers then people shouldn't risk their coins saving with them. Self custodying is not very tough as some may think and it's the best form of Bitcoin storage if people can safeguard their seeds.

[Mia Chloe]

~snip

Today the internet can actually be very scary especially with the rate at which people are getting their coins stopped. Two major things you should be looking out for today when you’re holding. First is your entropy during seed generation which always suggest you add custom words.

Secondly is your storage method. Don’t store online and if you’re storing offline try as much as possible to have at least 2 back ups including a paper backup.

[Yandakava]

I believe the convenience is very good for us, but we shouldn’t let go of our security concerns that. The history of Bitcoin have said it all, having control over your private keys is important. When you leave your Bitcoin on decentralized exchanges, you are trusting other people with your funds, and anything can happen if exchanges gets hacked, like Binance that was hacked recently. Centralized network make bitcoin easier to buy and sell for everyone, especially for beginners. Most individuals will prefer having control over their Bitcoin through private wallet, which we know the responsibility of private wallets. You must also be responsible for keeping your wallet secure.

[Odohu]

This post brings a lot of memories as it remind me some of the things I did when I started especially with some coins in invested in that had their blockchain. We had to store the walet.dat file in the same computer we used for every other thing and which is always connected to the Internet. We never knew the security risk associated to some of those things. Now things have moved better and there are alternatives now.

[Antidote47k]

​The wallet.dat File: When you ran the original Bitcoin software on your desktop computer, it downloaded the blockchain and automatically generated a local file named wallet.dat. This single file held your private keys. If the file corrupted or the hard drive died, your funds vanished. Except you backed it up somewhere else like another conputer, flash drive or hard drive.

No Seed Phrases (BIP-39): Modern 12 or 24 word recovery phrases didn’t exist yet. Backups meant manually copying your wallet.dat to a USB stick, burning a CD, or printing out raw strings of alphanumeric private keys (early "paper wallets").
https://thaibitcast.com/en/blogs/articles/the-history-and-evolution-of-cryptocurrency-wallets?hl=en-US#:~:text=In%20the%20early%20days%2C%20we%20did%20not,were%20lost%2C%20access%20would%20be%20permanently%20denied.

An important development was hierarchical deterministic (HD) wallets. Previously older Bitcoin core wallets generated individual private keys which means backups made before new addresses that were generated might not contain those later keys. The introduction of HD wallets changed this by deriving multiple addresses from one master seed which makes recovery easier cause the same seed could be used to regenerate the wallet's key hierarchy.

As for convenience and custody they aren’t necessarily opposites, there are non custodial wallets that are relatively easy to use and they still give users control of their private keys, so it’s not about whether the wallet is easier to use or handle but more about who controls the private key and bears the reponsibilty.
With custodians you get account recovery options and easier access but introduces counterparty risk, self custody removes that risk but the responsibilities for backup and recovery now lies on the user.

[Sammysmart001]

Abeg, how do you see this custody thing now? Are we rushing too much for convenience and handing our keys to centralized platforms, or do we actually need these easier tools?

Actually we do need the easiest tools but we don’t actually need to hand over our keys to them. For a new user exchange is actually a nice place to buy  Bitcoin fast. But after the buying it actually expected to move it to self custody wallet. That the main lesson from Mt. Gox and other hacks.

Than it was wallet.dat wahala  if file should spoil, the money is gone. But now seed phrase has make things easier, you can write down your 12 words on paper and keep it in two safe place and you have secure your Bitcoin.

[Amphenomenon]

Abeg, how do you see this custody thing now? Are we rushing too much for convenience and handing our keys to centralized platforms, or do we actually need these easier tools?

Actually we do need the easiest tools but we don’t actually need to hand over our keys to them. For a new user exchange is actually a nice place to buy  Bitcoin fast. But after the buying it actually expected to move it to self custody wallet. That the main lesson from Mt. Gox and other hacks.

I feel like you are ignoring the fact that the issues with CEX goes beyond having full control of your keys/coins.

The risks of KYC still persist and if we often see CEX as an easy access then Newbies might fall for victims, it's better to speak about this risks also and then let them pick their preferences.

Than it was wallet.dat wahala  if file should spoil, the money is gone. But now seed phrase has make things easier, you can write down your 12 words on paper and keep it in two safe place and you have secure your Bitcoin.

While the wallet.dat file might seems more complicated it's not like you describing. You can also keep a back up of it in various safe place.

[Hypnotizer]

I believe the convenience is very good for us, but we shouldn’t let go of our security concerns that. The history of Bitcoin have said it all, having control over your private keys is important. When you leave your Bitcoin on decentralized exchanges, you are trusting other people with your funds, and anything can happen if exchanges gets hacked, like Binance that was hacked recently.
~

You can’t store bitcoin on “decentralized exchanges” because they never take custody of your coins when you want to exchange with a peer.

Maybe it was a typo or something since I saw you wrote “centralized network” after that, but if it wasn’t then I’d want you know that Binance is not a decentralized exchanges, it is a centralized exchange.

[pooya87]

As people wanted to trade Bitcoin, early platforms like Mt. Gox popped up around 2010.

Fun fact: Mt Gox controlled the largest percentage of the total trading volume ever held by a single entity. It was around 80-85% of the total volume. One of the reasons why the market catastrophically crashed after its hack was this major control they had.

Today biggest exchanges barely reach 5-10% of the volume.

That's to let people know how vulnerable exchanges have been from the unset and never to be trusted, if the first exchange since back then was hacked and exchanges now haven't found solutions to deal with hackers then people shouldn't risk their coins saving with them. Self custodying is not very tough as some may think and it's the best form of Bitcoin storage if people can safeguard their seeds.

Keep in mind that the risk of CEX getting hacked is only one of the problems with storing coins with them. The other problem which may be more serious, is the fact that the control is being given up when the coins are stored in a CEX. Not your keys; Not your coins.

[Nasdel4]

As people wanted to trade Bitcoin, early platforms like Mt. Gox popped up around 2010.

Fun fact: Mt Gox controlled the largest percentage of the total trading volume ever held by a single entity. It was around 80-85% of the total volume. One of the reasons why the market catastrophically crashed after its hack was this major control they had.

Today biggest exchanges barely reach 5-10% of the volume.

That's to let people know how vulnerable exchanges have been from the unset and never to be trusted, if the first exchange since back then was hacked and exchanges now haven't found solutions to deal with hackers then people shouldn't risk their coins saving with them. Self custodying is not very tough as some may think and it's the best form of Bitcoin storage if people can safeguard their seeds.

Keep in mind that the risk of CEX getting hacked is only one of the problems with storing coins with them. The other problem which may be more serious, is the fact that the control is being given up when the coins are stored in a CEX. Not your keys; Not your coins.

I will agree that the incident with Mt Gox is a huge reminder that it's actually dangerous to leave majority of your bitcoin in one single exchange and this actually goes beyond just getting hacked. Even if you believe the exchange to have very strong security, remember that you still don't have total control over your bitcoin because you'll still have to depend on the exchange for withdrawal.
It's understandable that self custody comes at a cost which is simply being responsible for your own bitcoin, storing your seed phrase and protecting it. Don't forget that "not your keys, not your Coins".

[MainIbem]

That's to let people know how vulnerable exchanges have been from the unset and never to be trusted, if the first exchange since back then was hacked and exchanges now haven't found solutions to deal with hackers then people shouldn't risk their coins saving with them. Self custodying is not very tough as some may think and it's the best form of Bitcoin storage if people can safeguard their seeds.

Keep in mind that the risk of CEX getting hacked is only one of the problems with storing coins with them. The other problem which may be more serious, is the fact that the control is being given up when the coins are stored in a CEX. Not your keys; Not your coins.

What some people don't understand is that part of the reasons why Bitcoin cause created is so that people who adopt it can control their money, so storing it in exchanges is like going against the concept of self custody, infact what's the need of adopting Bitcoin when their money is in the custody of an exchange. Well i understand that some folks are ignorant about that and hopefully they'll learn with time but those who understand but still choose to risk using exchanges are really crazy as fvck if you ask me.

[Emeraldo]

Relying to keep your Bitcoin on exchange is fucked. You'll gonna cry for not listening to the rules of thumb.
You can't keep your money in an exchange just because you want to escape the volatile market while you quickly swap your Bitcoin to that bullshit of a stablecoin thinking you'll be safe there lol. People need to start learning hard than they have ever imagined.

From the early days, keeping your coins on exchanges was a bad idea and everywhere live by keeping it in a wallet they have access to the seed phrase. Exchanges are adding attractive features to lure investors to leave their coins on their platform so they can make money from it.

[pooya87]

What some people don't understand is that part of the reasons why Bitcoin cause created is so that people who adopt it can control their money, so storing it in exchanges is like going against the concept of self custody, infact what's the need of adopting Bitcoin when their money is in the custody of an exchange. Well i understand that some folks are ignorant about that and hopefully they'll learn with time but those who understand but still choose to risk using exchanges are really crazy as fvck if you ask me.

Exactly. In my experience the people who ignore this are the same people who never even understood bitcoin. They just saw something that goes up and thought they could make a lot of profit by investing in it. These are the same people who panic sell every time there is a FUD out.

[Btcdeybodi]

What some people don't understand is that part of the reasons why Bitcoin cause created is so that people who adopt it can control their money, so storing it in exchanges is like going against the concept of self custody, infact what's the need of adopting Bitcoin when their money is in the custody of an exchange. Well i understand that some folks are ignorant about that and hopefully they'll learn with time but those who understand but still choose to risk using exchanges are really crazy as fvck if you ask me.

Exactly. In my experience the people who ignore this are the same people who never even understood bitcoin. They just saw something that goes up and thought they could make a lot of profit by investing in it. These are the same people who panic sell every time there is a FUD out.

You just made me remember what happened after the US elections in 2024 when the price of Bitcoin started skyrocketing and hit $100,000. The news was everywhere and some of my friends who were never interested in Bitcoin started asking me how they can invest and after teaching them, they bought and hold till the price got to $126k, but when it started falling and the FUD was everywhere they were also part of the people that sold out of panic. This shows that some people just come into Bitcoin when the market is rising but as soon as it starts falling you will see them rushing to sell their Bitcoins because they don’t really understand how Bitcoin works such that even if the price falls, it will still rise again if they can hold for a long term.

[Agbamoni]

As people wanted to trade Bitcoin, early platforms like Mt. Gox popped up around 2010.

Fun fact: Mt Gox controlled the largest percentage of the total trading volume ever held by a single entity. It was around 80-85% of the total volume. One of the reasons why the market catastrophically crashed after its hack was this major control they had.

Today biggest exchanges barely reach 5-10% of the volume.

The majority of exchanges that came out in the early period when people decided to trade Bitcoin are nowhere to be found now. Then it was the experimental exchanges. BitcoinMarket.com was also among them after Mt. Gox. I think this was back in 2010.

Between 2011 and 2013, more exchanges came in. BTC -e, Kraken, Coinbase. The funny thing at that time is that people cared less about privacy and anonymity. Because the influx of traders and whales was massive.

We've actually come a long way. It's no longer exchanges running the show. Regulatory bodies and institutions have joined. Making privacy and anonymity a concern to everyone.

[MainIbem]

What some people don't understand is that part of the reasons why Bitcoin cause created is so that people who adopt it can control their money, so storing it in exchanges is like going against the concept of self custody, infact what's the need of adopting Bitcoin when their money is in the custody of an exchange. Well i understand that some folks are ignorant about that and hopefully they'll learn with time but those who understand but still choose to risk using exchanges are really crazy as fvck if you ask me.

Exactly. In my experience the people who ignore this are the same people who never even understood bitcoin. They just saw something that goes up and thought they could make a lot of profit by investing in it. These are the same people who panic sell every time there is a FUD out.

Many came for quick profits mate, without even understanding the ideology behind the creation of the coin. Although they're contributing to the adoption process but not doing it the right way by holding in exchanges. Thanks to forums like Bitcointalk where good knowledge about the coin is passed consistently and those who would be privileged to discover this platform would learn a lot and deviate from wrong storage of the coin, nor panic whenever it goes down cause there are several threads here that encourages long term holding and teaches people against panicking when there FUD.

[JimaGod]

That's to let people know how vulnerable exchanges have been from the unset and never to be trusted, if the first exchange since back then was hacked and exchanges now haven't found solutions to deal with hackers then people shouldn't risk their coins saving with them. Self custodying is not very tough as some may think and it's the best form of Bitcoin storage if people can safeguard their seeds.

Keep in mind that the risk of CEX getting hacked is only one of the problems with storing coins with them. The other problem which may be more serious, is the fact that the control is being given up when the coins are stored in a CEX. Not your keys; Not your coins.

A lot of people are still aware of the risk associated with using CEX but still go ahead because a lot of them run from the responsibility of self custody and aside the fact that we have to write down our keys and being responsible for them, I don't think there is any work required with self custody.

If people can remember that not your key, not your coins, then they should be able to avoid these CEXs