DISCLAIMER: I am relatively new to crypto currencies and hold the majority of my savings in precious metals. I believe crypto currencies are heavily reliant on third party participation and so I do not have the unhindered faith in them as some do. I do try to make a profit with them however so I hold a small stake some in the major cryptos (BTC,LTC, DASH, DOGE, XMR etc.)
Recently I had traveled to New York and while I was there I wanted to visit the Ledger Nano retailer since the one near me in Toronto is a little out of my way. I googled "bitcoin new york"and came across bitcoincenternyc.com. I went down to the Prince street address listed on their website which turned out to be an old walk-up apartment converted into retail space. I walked into what used to be the living room now furnished with 2 large desks and a well-used couch. There were 8-10 people busy on their laptops throughout the space, no one even noticed that I had walked in. I went up to the BTC ATM and bought some BTC which I had sent to my Myclium wallet on my phone. I didn't see any merchandise of any kind on display so I decided to leave but before I did, I left I turned to the guy sitting at the larger table and asked him if he knows where I could find a hardware wallet in NYC, this was the catalyst to a long talk and informative discussion...
What's ledger? asked this "bitcoin expert", who wrote the code? Is the code open? Is the wallet connected to the internet in any way? I managed to mumble out the wiki description of Ledger and the people behind it but this guy had just proved to me that NO ONE ACTUALLY POSSESS THER COINS IF THEY ALLOW AN APP OR DEVICE TO HOLD THEIR PRIVATE KEYS!!
He reached over to the ATM and hit PRINT, out popped a strip of thermal paper, like a receipt, with 2 QR codes and 2 alpha-numeric addresses on it. "There you are... more secure than any hardware wallet and it's free. Print as many as you like and you will never have to worry about being hacked or your hardware failing."
This got me thinking, who controls your private keys? When you deposit coins onto an exchange, you have to click "generate address" before doing so. At that moment your private and public keys are generated. The public one is your deposit address which you end up copying and pasting somewhere and the private one is kept by the exchage. Yes the infamous exchanges, the companies that helped bring bitcoin into the spotlight in the past, exchanges like Mt. Gox, Mint Pal, Bter Cryptsy and the countless small insignificant excahages. How long can we trust the remaining exchanges? Bittrex is one of my preferred exchanges and they have a daily trade volume of 100,000BTC+/day or $500M/day in todays value. The exchanges regularly shut down wallets to perform maintenance on them which leaves you disconnected from your coins and your private keys until the maintenance is completed. What if BTC goes up to $10,000 or $100,000? This would mean that at any given time there could be several billions of dollars on this particular exchange controlled by 2 quasi public figures who used to work for Amazon. Even with the almost certainty of new new regulations in the future, this still feels very familiar. As a side note, to all my conspiracy friends out there, one of the founders of Bittrex displays "one eye"" symbolism in his twitter profile picture, I'm not sure if that means anything but I just found that interesting.
I've browse several forums and noticed that "Hot Storage and "Cold Storage" are terms that are not used very often. It seems that that most people are content leaving their coins in other people's hands, sort of like the bullion dealers that also offer "storage" services. NO THANK YOU!!! I prefer to hold onto my precious metals myself and likewise my cryptos as well.
Hot Storage is when your coins are in a wallet connected to the internet and thus hackable ie. a desktop or mobile wallet or an exchange wallet. Cold storage is when your wallet address and coins have been time stamped on the blockchain but the wallet itself has been taken offline by having the keys recorded manually instead of by software. In order to do this there can be no digital trace of your keys such as a .txt .pdf .dll or .conf file. You have to print whatever is on your screen the moment you click "generate new address" in the wallet generator.
So needless to say, I have changed my mind about hardware wallets and have done a little research to compile the following very simple instructions. Essentially, I print out the keys and seal them up in a self-laminating sheet.
HOW TO MAKE A PAPER WALLET
- Go to your desired wallet generator site (see below)
- Go through the randomizing steps and click Generate New Address a few times as well
- Make sure your pc is connected to a printer and then print
- Cut out the secret/private keys and put aside
- Printout an image that would look nice folded in half (google search works great)
- Cut out your public QR code and address and glue to the front of the folded image
- Place the private keys in between the folded sheet and seal up using a self laminating sheet
Wallet Generator Sites
www.bitaddress.org
https://liteaddress.org
https://dogecoinpaperwallet.net
https://walletgenerator.net
www.universalwalletgenerator.net
HOW TO GET YOUR COINS OFF OF A PAPER WALLET
Most wallets and exchanges will have an "Import" or "Sweep" feature which will allow you import or sweep your paper wallet. These 2 features are basically the same the only difference being that Importing your keys will just add your keys to the exsisting group of keys in your wallet client and sweeping your keys will transfer the balance on the paper wallet to your BTC client making them accessible with your BTC client keys. This site explains importing and sweeping in more detail https://99bitcoins.com/know-more-private-key-import-vs-sweep-difference
TLDR: The best way to keep your crypto currencies safe and secure is on a paper wallet made at home.
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STOPWhy are cryptocurrencies heavily reliant on third party participation? You need a second party in order to buy stuff, but a third party is optional. It's peer to peer. I can send them to anyone without the need for a third party.
I agree, however we all need a computer/phone, electricity, nodes at the very base level and that is a lot more complicated in comparison with gold or silver. I love cyptos and blockchain tech, I think it's great but not quite as secure as precious metals in my opinion.
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