Written by Kyle Bruder, published on Jan. 7, 2021, 8:49 p.m., last updated on March 11, 2021, 10:41 p.m.
The number one rule of Bitcoin is, “Not your keys, not your Bitcoin”. That means you do not possess bitcoin until you have it in a digital wallet in which the private key for that wallet is known only by you. If this doesn't make sense, don't worry. You do not need to understand Bitcoin at a technical level in order to safely and securely obtain, control, and store Bitcoin. This article will show you the best, tested, fastest, most secure way to secure your Bitcoin.
Another common Bitcoin rule is, “Do not invest more than you can afford to loose”. Heed this advice but let's shift out thinking here. Buying Bitcoin with US dollars is no longer an investment. When you convert anything of value into Bitcoin, your are storing the buying power, or value of what ever it is. Because of Bitcoin's permanently limited supply, demand for Bitcoin can be sustained indefinitely. The idea is that your wealth will be preserved over long periods of time. Even if you make a nice profit from buying and selling bitcoin in the short term, the potential value of the Bitcoin that you sold, over the long term, will be far higher than any short term gain.
First, set your expectations. It can take a day or two or more to get setup on any crypto exchange. They are gonna want to know who they are dealing with. If you are new to Bitcoin, have a US government issued ID, and have a US bank account and want to trade US dollars for Bitcoin, start a Coinbase account.
Coinbase has major issues. The apps are terrible and buggy, the site basically shuts down during a rally, there is no way to access your private keys, and they will report you to the IRS. Despite all that, I still maintain that it is the safest, best option for people in the US that are new to Bitcoin. Just remember, this is a means to an end. Coinbase an exchange, not a full on Bitcoin solution so after you get started on Coinbase, please read the rest of this article.
Buy/Sell cryptocurrency - Coinbase
Coinbase is a secure online platform for buying, selling, transferring, and storing cryptocurrency.
Software wallets are software that interacts with the Bitcoin protocol in order to send and receive bitcoin transactions. There are many different types of software wallets available. Software wallets are about as secure, maybe even less, as keeping a wallet in your back pocket. Thieves can take it, you can accidentally leave it in a public place, or you can easily spend or give away all of its contents.
Hot wallets are the least secure software because they are always connected to the Internet and therefore are the easiest targets for online hackers. The only hot wallet I use is Coinbase. Use Coinbase to convert US dollars into Bitcoin then send it to a wallet for which you have possession the keys. Leave a little in there so you can whip out your phone like a pro and pay someone or get paid in Bitcoin if you like. Never keep more than 0.001 Bitcoin in there.
Warm software wallets can go online so you can transact with them, but you can also take them offline. That makes it about 0.01% more secure than a hot wallet. If your warm wallet is going to get hacked, it is likely going to be when you take it online. If your keys or recovery seed gets discovered by a hacker while you are online with a warm wallet, that's it game over. Even if you take it offline after that they have your Bitcoin. Never keep more than 0.01 Bitcoin in a warm wallet.
Hardware wallets are for long term storage of Bitcoin. This is where you want your Bitcoin to live. I'm not going to waste your time here. Get a Trezor. It doesn't matter which model. For the purposes of securing your Bitcoin, any Trezor will do. Trezors arrive with a holographic tamper proof seal for authenticity. The keys and recovery seed words are created on the hardware device itself. You can use their web application in order to look at your balances or make transactions, but all you need to have possession is the private keys or the recovery seed for the device.
If your only aim is to keep your private keys safe and you do not expect the device to do anything else, I recommend the simpler and cheaper model - Trezor One. Its price has recently gone down by almost a quarter, allowing you to get a top-quality hardware device for a reasonable and affordable price.
If you want to use your Trezor often, you want to enjoy added security and comfort of a color touch screen and you want to use additional features (such as MicroSD for future storage of encrypted passwords and somewhat more extensive coin support), you might want to invest in the new Trezor Model T. Additionally, it is also noteworthy that the Model T design appears to be much more robust and durable.
The Model One was created as a single-purpose device and is now firmly established as the golden standard of hardware wallets. Model T is meant to be a platform with broader future use cases and possibilities.
Whether you're new to Bitcoin or already a security expert,
Trezor Model One is the #1 Bitcoin wallet choice for everybody.
Trezor Model T
The Trezor Model T is the next-generation cryptocurrency hardware wallet, designed to be your universal vault for all of your digital assets. Store and encrypt your coins, passwords and other digital keys with confidence.
Bitcoin is secure by design. All you need is a tool to use it without risk. All you need is your own Trezor wallet.
When setting up your Trezor hardware wallet, or other BIP 39 compatible wallet, you will be shown a unique ordered list of words on your device. This is the recovery seed. Your Trezor comes with a nice thick card stock with which to write down your seed. Make sure no one knows this seed. Cover the cameras on your laptop/phone/tv/baby monitor/etc. Lock it up in a safe or secret hiding spot.
You are almost home free. You now truly possess your Bitcoin, can confirm your control by making test transactions, and can verify your wallet balances by checking the blocks online. But what if the secret hiding spot for your recovery seed floods or burns? That card stock might not hold up.
This is where crypto steel comes into play. The Cassette comes with more than 250 stainless steel letter tiles, engraved on both sides. You can manually assemble the first four letters of each word of your recovery seed from the included set of tiles by sliding each tile into the cassette. Each word of a BIP39-compatible recovery seed can be identified from those first four letters. No extra tools needed. No third-party involvement is ever required and gives the user the power to protect their information. .
Once you have your seed entered into the crypto steel and you have done a test recovery, destroy all other copies of the seed. Burning is the best way. Do not tell people about your crypto steel or where you have hidden it. Keep it on you at all times if its practical to do so. If anyone discovers your crypto steel or any copy of your recovery seed, your Bitcoin is as good as gone.
The classic design that established the offline metal backup market provides a lightweight and portable solution while being incredibly durable and secure.
A seed phrase, seed recovery phrase or backup seed phrase is a list of words which store all the information needed to recover Bitcoin funds on-chain.
Trezor Crypto Steel
The Cryptosteel Cassette is the product that started it all and established the market for offline metal wallets. The Cassette is a pocket-sized stainless steel unit designed to securely store the alphanumeric data of your choosing with no need for specialised tools or third-par…
The smallest unit of bitcoin is called a Satoshi. There are 100 million Satoshis in 1 Bitcoin. If you are unsure about how many of your US dollars to convert to Bitcoin then buy small amounts periodically. This is known as “stacking sats”. Most exchanges, including Coinbase allow customers to set up recurring buy plans. Just make sure you are moving the Bitcoin off of the exchange and into a wallet that you control as you are buying. When it comes to online exchanges, trust, but verify. Check to make sure your sats are making it your wallets.
This article is only the minimum need to know about getting into Bitcoin. There is so much more to learn about if you are interested. Even if the technical side of Bitcoin is intimidating, the philosophy behind it is amazing.
Andreas M. Antonopoulos
My mission is to educate the world about bitcoin and open blockchains and reveal the historical, technological and socio-economic impact.
Bitcoin: A Peer-to-Peer Electronic Cash System
A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.
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Contributed by Kyle Bruder on Jan. 7, 2021, 8:49 p.m.
Last updated on March 11, 2021, 10:41 p.m.