Cold Storage and Bitcoin Security

With every security breach making it into the news, people are (mis-)led to believe that Crypto currencies “weren’t safe” or even “had failed” or something along these lines. Depending on the nefarious intent behind these headlines (as in the case of established banks bashing Bitcoin as part of their agenda) this may or may not scare potential users from even thinking about using Bitcoin.

The reality is a totally different story though. It's the card industry itself that's not secure, rather than Crypto: over 40% of profits in that business have to be spent on “fraud prevention” (meaning they cannot even prevent most cases of fraud anyway but rather need the above amount for compensation of resulting losses in order to keep affected customers quiet). Still, this hasn’t prevented anyone from using credit cards nor similar bank-backed “electronic” forms of payment — yet.

Crypto coins are a different story though. The level of security only depends on whether or not prudent steps are taken by the user individually. Tehy can be taken and need to be taken, but it's quite easily possible, too, and users themselves are in full control over this. Unlike credit cards where trust has to be given to third parties, the very nature of peer-to-peer technology means that everyone is holding the keys and is solely responsible and in charge of their own funds and security.

Improving the security of your Bitcoin holdings is always easiest through the use of simple Paper Wallets: you only need to move all portions of your savings to Cold Storage (i e into your paper wallet or offline storage, if your appetite is for a more complicated device) and only keep smaller amounts needed for spending in a Desktop wallet, in online wallets, or other less-secure locations like Crypto coin exchange portfolios and similar.

A paper wallet can be used by anyone: it is a simple piece of paper run from your printer — preferably a “dumb” printer, i e one without Wi-Fi or similar security loopholes — containing your public address for deposits along with its private key for retrieval. Paper wallets even allow you to receive additional funds into your cold storage location (if you reveal the public key or receiving address to parties you want to receive funds from).

That way, you are not only “your own bank” (or your own vaulting and safe-keeping service) but as safe as one, too -- or safer.