Securely Storing Bitcoin
I recently made my first purchase of Bitcoin from coinbase.com. A couple of observations.
Holy cow was this intrusive. There are 3 ways to buy: PayPal, a bank account or credit card. First I tried the credit card route because it allowed for immediate purchase. Coinbase asked for the usual stuff, name, address , email. It also wanted cell phone number (this is where the intrusiveness started for me). For a credit card transaction they also required a picture (front/back) of my driver’s license!
Needless to say I stopped there for the night, frustrated. I looked for more anonymous ways of buying. I found a Bitcoin ATM through the site localbitcoins.com. I was very unimpressed with the selection in St. Louis, MO. At the time they were asking 5-8% premium with a $2,500 min purchase. The ATM is operated by athenabitcoin.com.
So I reluctantly went back to Coinbase and set up an account using my bank account, which didn’t require a driver’s license but who cares now they have my bank account info! I was charged a 1.49% Service Fee with a $0.15 minimum purchase. Coinbase has a $2,500 weekly limit on bank account purchases (unless of course you upload your driver’s license then your limit will go up, not sure how much). Once you buy a specified amount the price is locked in but takes 5 business days for the Bitcoin to transfer to your account and be accessible.
Now that I have the Bitcoin in a wallet on coinbase I want to get it off.. this is where I hope members of PP can help. What is the best way to store Bitcoin offline? There are a few options I’ve researched. One is to create a wallet on a USB Stick offline and transfer them (using MultiBit.org for the wallet creation). The other option is to create a paper wallet using bitaddress.org. Here are two video tutorials I’ve watched on the subject.
How to store on a USB Stick:
How to create a paper wallet:
Does anyone have a preferred method? If so why? Also how many bitcoins would one recommend storing/sending to one wallet address?
Thanks for the help!
You store your bitcoins in wallets. Coinbase is a web based wallet. Hardware wallets are the most secure. Here are a few.
Trezor was the first one to come out and is the standard, at least for now. Keepkey just purchased the software wallet Multibit. They will be integrating their Chrome app functions, which includes altcoin exchanges through shapeshift.com. I use coinbase to buy my bitcoins. I then send them to one of my hardware wallets.
Trezor also has a web based password manager that is accessed using their hardware wallet. It doesn't have the flashier functions of Lastpass etc, but it's probably the most secure.
Thanks skipr! Any thoughts on Ethereum storage? I saw on Reddit that trezor is working to get into the market. I wonder if I purchase a unit now if it will be able to support Ethereum storage in the future? $100 is the most expensive storage device I've ever purchased but they had me at easy to use 🙂
I asked Trezor support about whether they were going to create a mytrezor.com for the other altcoins. They said no. There are separate Electrum software wallets that work with the Trezor for Bitcoin, and Litecoin. A fully released version for Dash will be released soon. I haven't heard about another Electrum wallet for Ethereum yet.
I know for sure that Keepkey's Chrome app now supports bitcoin, litecoin, and dogecoin. They are all contained within a single wallet. Their web site says that it also supports Dash. I may need to update that app and/or firmware since I didn't see it. They also said that they will be supporting Ethereum and others soon. When they do, it will be the first hardware wallet to do so. They say that integrating all of this functionality into Multibit will take a little bit of time. You can easily exchange bitcoins for litecoins etc etc. within the app-wallet.
The Jaxx and Exodus software wallets say that hardware wallet support will be coming soon. You can do altcoin exchanges with them too.
The beauty of BTC is the possibility to make economic transactions outside of the fiat/banking-system around the world in just a few seconds. Therefore, I prefer to have a majority of my coins online (perhaps not as secure, but if needed, I want instant access for transactions) using the Blockchain.info app on my iPhone. Some PM's dealers also accept Bitcoin and it is nice to purchase silver with BTC.
Cold-storage is for the true believers. I'm not entirely convinced of BTC's long-term viability just yet. Remember that this 'project' – for lack of a better word – is just 8-9 years old. PM, on the other hand, have been money for more than 5000 years. When the current digital/paper system comes crashing down I'm pretty sure people will want something tangible. But hey, who knows with all the millenials..
Thanks again Skip, I know there have been many new crypto currencies come online, many you point out I have never head of.
To A23's point, I am a cold-storage person. I do not use my cell phone for transactions at this point; also the options are limited as far as 'acceptability' in the midwest. I view it as another way to personally diversify into 'hard assets'.
I would like to pick your brain though Skip.. Are you a believer in crypto currencies as a long term viable solution? Do you like one that you mentioned above more than another? I like the fact that China and India are early adopters and believers (HUGE market).
There are hundreds of altcoins out there, but only a few of them are significant. I'm also a cold storage guy. I think cryptos will really take off when the SHTF. I read that some people in Venezuela are buying up a bunch of them. The short term correlation between the dollar index and the price of gold is strong. When the index goes up gold goes down and vice versa. During several of these most recent cycles BTC continued to go up. I wonder what that is saying about what's really going on and what's about to happen.
Right now, cryptocurrencies are more of a hobby, though I use BTCs to pay my Dish TV bill. My plan right now is to duplicate the metal traders' strategy of selling gold and buying silver when the gold/silver ratio (price of an oz of gold divided by the price of an oz of silver) peaks and vice versa. The ratio usually varies between 30 and 80. The idea is to accumulate as much metal as possible, not its dollar value, so when the SHTF you will be sitting in as nice of a place as possible. It's a pretty safe long term strategy since there's a lot history there. I was hoping to do the same with cryptos. This site has a nice graphical display of price of the other coins in terms of BTC:
It showed a fairly regular cycle in the DASH/BTC ratio during the last few months, so I exchanged some BTCs for DASH when the ratio looked like it bottomed out. Of course, when I did so, BTC started taking off and the others were left in the dust. This strategy is pretty risky right now since there is so little history with them.
Maybe I should start a new forum/group for the cable TV series Mr. Robot. It’s a fascinating show about a small group of hackers trying to counter the 0.01%. They are lead by a genius hacker who also has some "personal problems” (I don’t want to spoil it for you). During the end of the 2nd season the evil multinational CEO talks about how BTC is putting a crimp on his plan to take over the world and how he has to create his own privately controlled digital currency to counteract it. Of course, the real world to-big-to-fail banks are trying to do the same. A few minutes later the hero receives a cell phone call with what looks like the symbol of the relatively new cryptocoin Monero on the display. There’s all sort of stuff like that in the show.
MJB, check out Circle. You might like their setup more than Coinbase's,
Thanks for the info Skip, I'll have you know I made the first transfer over to the TREZOR device today. I thoroughly enjoyed it from an educational standpoint.. Now to get all my friends on board 🙂
I will say I was a little shocked how long the transfer took. I did one just to try it, followed by another. The first took 20 minutes and the second hasn't gone through yet, its been over an hour.
I don't have cable, to expensive for the very little I watch TV. Maybe its on Netflix though? I'll check it out if it is because Mr. Robot sounds like a show I would be interested in.
mmortal03, I looked up Circle.. interesting but only something I'd subscribe to if the bitcoin buying fees are cheaper than Coinbase's 1.49% of total transaction cost. Do you know what the fees are? I am not a big mobile payment person, as I said before the bitcoin I have aren't for transactions. I am using them strictly as a diversification tool, for the time being anyway.
Hi MJB…Though it takes a while for BTCs to clear, my visa is actually slower. Some of the newer cryptos are faster, but they are not the big boy in town. BTCs are supposedly the best way to transfer large amounts of money/value/etc…. Hopefully the other faster cryptos will be accepted for small retail transactions soon.
I bought the DVDs of the first 2 seasons of Mr Robot. Since I don't have a photographic memory I have to rewind it a few times to pick up all of the little details that become significant in later episodes.