Understanding Cold Storage

[Dxuz]

Hi, i'm newbie here and i want to ask some of the following question

1. What is cold storage?
2. do u have any recommended cold storage?
3. is it true u have to download +/-2GB in order to have your cold storage updated?
4. Is it save?

thanks

[DannyHamilton]

Hi, i'm newbie here and i want to ask some of the following question

1. What is cold storage?

Cold storage is a set of private keys (and the associated bitcoin addresses) generated on a computer that is not connected to the internet, and stored in a way that has a significant likelihood of longevity while remaining inaccessible from the internet, and secure from unauthorized physical access.

Generally, to maintain security the computer that generated the bitcoins is either kept permanently offline, or has it's hard drive formatted and the operating system re-installed.

2. do u have any recommended cold storage?

Armory or Electrum offline are both good ways to generate addresses on an offline computer while still being able to access the bitcoins if/when you want to.  They both provide ways to import private keys when you finally decide to spend from the cold storage without needing to expose the private keys to a potentially vulnerable system.

3. is it true u have to download +/-2GB in order to have your cold storage updated?

The blockchain is currently closer to 20 GB. Wallets such as Bitcoin Core and Armory require you to have the entire blockchain in order to generate and send transactions.  Electrum does not, but relies on servers run by someone else to provide the Electrum wallet with the needed info.

If you are not trying to create a transaction, then you don't need the blockchain at all (locally or from a server).  There are several blockchain
explorers you can use to identify the current balance that a private key has access to.  You can look up the balance with the bitcoin address.  Here are three of them:

• https://blockchain.info/
• http://blockr.io/
• https://blockexplorer.com/

4. Is it save?

thanks

When done properly?  Yes.

[Dxuz]

Generally, to maintain security the computer that generated the bitcoins is either kept permanently offline, or has it's hard drive formatted and the operating system re-installed.

How about flash drive?

The blockchain is currently closer to 20 GB. Wallets such as Bitcoin Core and Armory require you to have the entire blockchain in order to generate and send transactions.  Electrum does not, but relies on servers run by someone else to provide the Electrum wallet with the needed info.

so do you mean if i using Bitcoin Core or Armory i have to download +/- 20GB to do one single transactions?

If you are not trying to create a transaction, then you don't need the blockchain at all (locally or from a server).  There are several blockchain
explorers you can use to identify the current balance that a private key has access to.  You can look up the balance with the bitcoin address.

honestly,  

When done properly?  Yes.

done properly? like having antivirus in your system well updated?

[Light]

How about flash drive?

so do you mean if i using Bitcoin Core or Armory i have to download +/- 20GB to do one single transactions?

honestly,  

done properly? like having antivirus in your system well updated?

A flash drive doesn't really work because at some point you still have to connect it to an internet connected computer unless your willing to run it off a LiveUSB version of Linux. Still better to have an airgapped computer for this (you can buy a Raspberry Pi for $30 which will do the job).

Yes, if you don't want to download the whole blockchain you can look at Electrum.

Yes, one such example would be blockchain.info which allows you to search based on addresses and transactions.

Yes and no, if you're properly air gapped you won't have to worry about any viruses getting onto your system.

[DannyHamilton]

How about flash drive?

I'm not sure how long flash memory is likely to last before it deteriorates and becomes unreadable.  Another thing to consider is the possibility of it being lost or damaged.  Finally, keep in mind that computer connectors change over time, and it can become difficult to find a computer that an old device will connect to.  Imagine if you had stored your private keys on any of the following, how difficult would it be to access those private keys today if you wanted to:

• 1928 Magnetic Tape
• 1932 Magnetic Drum
• 1950s Magnetic Core
• 1963 Music tape
• 1971 8" Floppy
• 1976 5.25" Floppy
• 1981 3.5" Floppy

Or if you had to rely on any of the following connectors:

• DE-9
• DB-25
• DIN-8
• DA-15
• DC-37
• DD-50
• IEEE 1284 36-pin
• 5-pin/180° DIN

One of the more common methods of long term storage is pencil (or printer ink) on paper.  The only thing needed to access it is at least one working eyeball, and a mostly functional brain.  This storage method has stood the test of time, being first used with slight variations thousands of years ago, and still in general use today.  It is extremely cheap, and multiple copies can be stored in multiple locations to protect against loss or damage.

so do you mean if i using Bitcoin Core or Armory i have to download +/- 20GB to do one single transactions?

Yes, but not repeatedly for every transaction.  You can store the blockchain after you've downloaded it.  Then you only have to update from where you left off to get caught up again.  You can keep the online half of the program running on an internet connected computer so that is stays caught up at all times.

If you are not trying to create a transaction, then you don't need the blockchain at all (locally or from a server).  There are several blockchain
explorers you can use to identify the current balance that a private key has access to.  You can look up the balance with the bitcoin address.

honestly,  

Yes, honestly.  Why would I be lying about that?

When done properly?  Yes.

done properly? like having antivirus in your system well updated?

Done properly.

Like making sure that you don't connect the computer that generates the private keys to the internet before you are 100% certain that there is no remaining trace of the private keys on the computer.  Like making sure that you store the private keys in a way that you can access them in the future.  Like making sure that you store the private keys in a way that protects them from loss or damage, and from unauthorized access by others.  Like making sure that any time you spend any bitcoins that were received at an address, you spend ALL bitcoins that were received at that address.  If you only want to spend a portion, then create a new cold storage address, send the portion you don't want to spend to this new address, and then spend the entire remaining balance to the address where you are trying to send it.

[aboo]

This is a dumb question to some, but just curious is it more chances of losing bitcoin then keeping them safe?

Some time ago, I read a reddit post about some huge whale gambler losing his paper wallet.

I think he found it, but he took like 50 hrs looking everywhere stressed out etc.

[DannyHamilton]

This is a dumb question to some, but just curious is it more chances of losing bitcoin then keeping them safe?

Depends on the person.

Some people are very good at taking responsibility for keeping their property safe, others are careless and inattentive.

Is it more chances of losing USD than keeping them safe?

Some time ago, I read on the internet a story about a person that accidentally lost $10,000 cash.  Someone found it and returned it to them, but it took like 2 days and they were VERY stressed out.

[gweedo]

2. do u have any recommended cold storage?

This is for anyone, but my service https://apicoin.io has personally help setup 5 large cold storage wallets for business type transactions. We can help any business or site, get a cold storage with our software. We don't hold any funds or ask for private keys but we can help make that disconnect a lot easier

[Dxuz]

If you are not trying to create a transaction, then you don't need the blockchain at all (locally or from a server).  There are several blockchain
explorers you can use to identify the current balance that a private key has access to.  You can look up the balance with the bitcoin address.

honestly,  

Yes, honestly.  Why would I be lying about that?

i mean, honestly, i don't understand 

[Dxuz]

Yes and no, if you're properly air gapped you won't have to worry about any viruses getting onto your system.

air gapped? sorry, Indonesian

[Dxuz]

Like making sure that any time you spend any bitcoins that were received at an address, you spend ALL bitcoins that were received at that address.
If you only want to spend a portion, then create a new cold storage address, send the portion you don't want to spend to this new address, and then spend the entire remaining balance to the address where you are trying to send it.

could "sending all your bitcoin to your offline storage" means spent?

[Dxuz]

Have a look at bitcoin paper wallets.

Make sure to understand the process and try with small amounts first.

https://www.bitaddress.org
https://bitcoinpaperwallet.com

i don't really know the function of having paper wallet
for transactions? buying pizza using bitcoin's paper wallet?

[DolanDuck]

Cold storage in the context of Bitcoin refers to keeping a reserve of Bitcoins offline.

For example, a Bitcoin exchange typically offers an instant withdrawal feature, and might be a steward over hundreds of thousands of Bitcoins. To minimize the possibility that an intruder could steal the entire reserve in a security breach, the operator of the website follows a best practice by keeping the majority of the reserve in cold storage, or in other words, not present on the web server or any other computer. The only amount kept on the server is the amount needed to cover anticipated withdrawals.

Methods of cold storage include keeping bitcoins:

On a USB drive or other data storage medium in a safe place (e.g. safety deposit box, safe)
On a paper wallet
On a bearer item such as a physical bitcoin.
Online, but on encrypted media where the encryption key is offline.
Use a offline Bitcoin Hardware wallet (So far only Pi-Wallet is operational.)
Deep cold storage refers to keeping a reserve of Bitcoins offline, using a method that makes retrieving coins from storage significantly more difficult than sending them there. This could be done for safety's sake, such as to prevent theft or robbery.

Because Bitcoins can be sent to a wallet by anyone knowing the wallet address, it is trivial to put a wallet in cold storage but to keep a copy of the addresses needed to send funds to it.

A simple example of deep cold storage is opening a safety deposit box and putting a USB stick containing an encrypted wallet file in it. The public (sending) addresses can be used any time to send additional bitcoins to the wallet, but spending the bitcoins would require physical access to the box (in addition to knowledge of the encryption password).

Deep cold storage would typically be used for holding large amounts of bitcoins, or for a trustee holding bitcoins on behalf of others. In such a case, additional precautions should be taken beyond a simple example of a single safety deposit box.

The box could be accessed by bank or maintenance personnel, so the contents of the box alone should not be sufficient to access the wallet.
The box could be stolen or destroyed in a disaster, or the media could become unreadable, so the box should not contain the only copy of the wallet.
The trustee could die or become incapacitated. If access to the wallet or knowledge of its location is lost, or encryption passwords are lost, the bitcoins are gone forever. Provisions should be made so that the box can be accessed by someone else as appropriate, including any encryption passwords.

[Dxuz]

so do you mean having cold storage for example Bitcoin Core doesn't mean we have encrypted or secure wallet?

[ranochigo]

so do you mean having cold storage for example Bitcoin Core doesn't mean we have encrypted or secure wallet?

No, cold storage means to create a wallet that is offline and the device that generated it have never and will never touch the internet. It is a good way to ensure top security, hackers cannot access your offline device but if they have your encrypted wallet on a computer that is online, it is possible that they can somehow crack it. A good example of cold storage is paper wallet.

[Dxuz]

so what's the main function of having paper wallet then?
is it only shows your public and private key? or what?

[ranochigo]

so what's the main function of having paper wallet then?
is it only shows your public and private key? or what?

Your public key can be scanned by a QR code reader and you can spend it using the private key. It is the most secure way to store large amount of bitcoin.

[Dxuz]

so what's the main function of having paper wallet then?
is it only shows your public and private key? or what?

Your public key can be scanned by a QR code reader and you can spend it using the private key. It is the most secure way to store large amount of bitcoin.

how about if i live in a country or a place that doesn't buying or selling with bitcoin. What's the purpose of having paper wallet then?

[DannyHamilton]

If you are not trying to create a transaction, then you don't need the blockchain at all (locally or from a server).  There are several blockchain
explorers you can use to identify the current balance that a private key has access to.  You can look up the balance with the bitcoin address.

honestly,  

Yes, honestly.  Why would I be lying about that?

i mean, honestly, i don't understand  

Click on one of the links I gave you.

Enter your bitcoin address.

See the balance that is controlled by that address.

What part don't you understand?

air gapped? sorry, Indonesian

Air gapped means not connected by any electronic means.  Armory and Electrum offline both allow you to run two computers. One computer is connected to the internet.  The other computer (which stores your private keys) is NEVER connected to the internet, or to any other computer that is connected to the internet.  You have to physically move data from one computer to the other with a device (such as a flash drive or CD) or by typing it in.  Essentially you are physically carrying the data through the air.

could "sending all your bitcoin to your offline storage" means spent?

Yes.

But in this case we are talking about how to spend it AFTER you sent it all to your offline storage.  When you want to retrieve some of it from offline storage, because you need to use some of it.

Have a look at bitcoin paper wallets.

Make sure to understand the process and try with small amounts first.

https://www.bitaddress.org
https://bitcoinpaperwallet.com

i don't really know the function of having paper wallet
for transactions? buying pizza using bitcoin's paper wallet?

Paper wallet is a form of cold storage.  It is a way to store your private keys that can't be accessed from the internet.  At the most simple, it just means having the private key written on a piece of paper.  More commonly, to make it more useful, both the private key and bitcoin address are printed on the paper.  They are often printed in both human readable text, AND with a QR-Code making it easier to get the information into a computer.

so do you mean having cold storage for example Bitcoin Core doesn't mean we have encrypted or secure wallet?

Correct.  Bitcoin Core running encrypted on a computer that is connected to the internet is NOT cold storage.  That is a "hot wallet".

so what's the main function of having paper wallet then?
is it only shows your public and private key? or what?

It shows your private key, and your bitcoin address.

The bitcoin address can be given out to anyone allowing them to send bitcoins to that address and increase the balance of bitcoins that can be controlled with the private key.  The private key is used in the future when you need to access (send/spend) the bitcoins that have been sent to that address.

how about if i live in a country or a place that doesn't buying or selling with bitcoin. What's the purpose of having paper wallet then?

With bitcoin, any time you send bitcoins anywhere you are "spending" them.  It is the technical term used in englich to describe the process of creating a network transaction that moves control of bitcoins from one private key to another.

[bangi]

2. do u have any recommended cold storage?

This is for anyone, but my service https://apicoin.io has personally help setup 5 large cold storage wallets for business type transactions. We can help any business or site, get a cold storage with our software. We don't hold any funds or ask for private keys but we can help make that disconnect a lot easier

I just saw your site.

Isnt cold storage supposed to be no internet related?  So like not even uploaded onto a server network / cloud.