How to securely store your bitcoin

By the time you've managed to gain any significant profit from any bitcoin investments, you should seriously think about the security of your storage. Remember that with bitcoin there is no central institution where you can request chargebacks or compensation for losses. If someone manages to steal funds from your bitcoin account, they are gone forever and there's nothing anyone can do about it!

Rule no 1: Bitcoins are controlled by access to a private key.
Your private key: your money. Not your private key: not your money

Sounds simple, right? But I bet there's a good portion of you who keep their coins on an exchange or online wallet service. Which means your keys are not controlled by you - but instead by the company that runs the wallet/exchange. Even if they have no bad intentions: A single employee can go rouge with the key, they might be hacked or lose the data to bugs/hardware failure. As long as you do not have control over the private keys, you don't control the money!

Rule no 2: Everything connect to the internet can be hacked. There is no 100% security, never. Ever.

Think you are secure because you're using a local wallet software and no online service? Or you're storing your bitcoin on a wallet app on your phone? You're wrong! Researchers assume that 40% of all android devices are infected with keyloggers, which can also take screenshots. Remember that 12 or 24 word mnemonic recovery phrase when setting up your wallet? There's a good chance that it's saved somewhere on a russian server. And knowing it grants full access to all your private keys. Never ever bring sensitive information in contact with a device that has been or will be connected to the internet!

So what's the solution then? Hardware wallets!

Hardware wallets are small devices that are by design unable to connect to the internet and securely store your private keys. They are then connected via a specially shielded USB connection to a corresponding wallet software on your computer. When the wallet needs to sign a transaction, it is sent to the hardware wallet and signed there. The private key never leaves the device. Therefore a wallet like this could be used on a totally hacked computer, without any security concerns!

One of the most widely used and often considered best hardware wallet is the legendary Ledger Nano S'

Ledger Nano S - The secure hardware wallet

We've been using the Ledger Nano S ourselves for several months now and can absolutely recommend it. For more information check youtube, there are a tons of very good reviews out there.

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