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How to store bitcoins?

Neironix
November 1, 2018 12:00 AM
864 Views
How to store bitcoins?

How do bitcoin wallets work

Cryptocurrency wallet is similar to your wallet in real life, but there are differences and one of them is a public key. Public key is a unique set of numbers, which are actually represent the name of your wallet. This is not a password, it is just a name with which you may, for example, view a balance of your wallet, or others may do it, if they know your public key, or send you some amount of cryptocurrency. So, if you wonder: “How do I transfer bitcoins to my wallet?” – the answer is a public key. The other difference is a private key. Private key is actually the thing that makes btc wallet, or bitcoin wallet secure. Private key is a key to security of your wallet. Do not disclose it to people, who you don`t trust.

How to create multiple bitcoin wallets?

You may create more than one bitcoin wallet within one site or different sites. For example, if you want to create multiple MyEtherWallet wallets you need to visit their site, enter your password and and click “Create New Wallet” button – your first wallet is ready. Then it is necessary to repeat this procedure as many times as you need to create more bitcoin wallets.

Different types of bitcoin wallets

Your wallet may be offline bitcoin wallet and online bitcoin wallet. What is the difference between them and are there any more types of wallets? Offline wallets are mostly hardware wallets, such as TREZOR, Ledger Hardware Wallet, or Digital Bitbox Hardware Wallet. Hardware wallet is a small USB device. Your private key never goes away your hardware wallet and that makes it very secure. By using this type of wallet you protect yourself from phishing, malware and other.

Online wallet may be run in your browser as any site. Examples of online wallets are Cryptonator, Jaxx, Ethereum Wallet, Exodus, Blockchain.info, Electrum, Eidoo and so on.

So, hope now you are quite familiar with the wallets where to store bitcoins or how to store cryptocurrency. All online wallets mentioned above are digital bitcoin wallets or virtual wallet for bitcoin. MyEtherWallet is currently the best online bitcoin wallet. A hardware wallet is also known as a physical bitcoin wallet, a bitcoin cold storage, or an external bitcoin wallet. It is also the best way to hold bitcoin as long as this type of bitcoin wallet is the most secure one. The best offline crypto wallet is TREZOR. If you are curious about how to put bitcoin on a flash drive these simple steps will guide you through this process. First, you need to purchase your Trezor device or other hardware wallet device. Second, connect a hardware wallet device to your computer and start installation process. After that, in case of TREZOR you need to visit, when connected, you should select your Trezor model there. You will be required Trezor Bridge for communication between your Trezor device and your computer, so download and install it. After that reload the page in your browser and Trezor Wallet will automatically detect your Trezor device. Trezor Bridge requires no interaction, it means it will be automatically run in the background. Do not forget to install the latest up-to-date firmware as your new Trezor device supposed to be delivered to you without it, after that you may begin to create your new wallet. To generate it press “Create new” button. Your device will generate a new and unique seed which will hold all of your accounts and addresses.

Is a bitcoin wallet safe?

In order to answer this question let`s first figure out what bitcoin is, it`s definition. Bitcoin is a decentralized electronic cryptocurrency. “Decentralized” means that bitcoin has no central servers for transaction processing or storing of funds. Bitcoin transactions and emissions are regulated by an extensive peer-to-peer network, bitcoin uses a distributed public universal database, spread through a decentralized peer-to-peer network. The network itself uses digital signatures and is maintained by a proof-of-work protocol to ensure the security and a legitimacy of funds in use.

To make sure that a person, other than you will not be able to spend your bitcoins by emitting false transactions in their name, Bitcoin uses public key cryptography, a system of digital signatures, in which everyone may have one or more addresses or wallets, each with an associated pair of public and private keys. A user can sign a transaction with their private key, and the rest of the peers in the net can validate the signature by means of that person`s public key.

Actually bitcoins are not stored anywhere, only digital secret keys are kept, which give full permission to public bitcoin addresses and the possibility to “sign” transactions.

Public key cryptography is a system in which a part of data is encrypted with a public key, and can only be decrypted using the public key`s matching private key.

When a person wants to send bitcoins, their private key is combined with the transaction request (which consists of the receiver`s public address) to encrypt or digitally “sign” it. The digital signature made is important because it provides the nodes in the network with the mathematical proof, which is used for source identity verification and check that the sender has the right amount of bitcoins to spend. In the blockchain, all bitcoins are registered to an address, or public key.

Bitcoin wallets with private keys are safe. In order to keep it safe place for your bitcoins you should use only recommended ways to access your wallet. Entering your private key on a website may compromise it`s security, as you may accidentally visit phishing site, and your funds will be stolen if you type important information, such as a private key, there.

In order to maximize level of your security while operating with hardware wallet such as Trezor you will be required to create a backup.

To make it happen click on “Create a backup” and prepare to write down your recovery seed on specially designed cards included in the package. Recovery seed is a random set of English words.

All given information may be used not only for bitcoin, but for any cryptocurrency. Wallets are very flexible tool for storing cryptocurrency or tokens. They are very secure and each day becoming even more secure.

Even the most secure bitcoin wallet may not help you, if you are accessing your wallet without simple antivirus protection in case you are operating with it via online wallet.

While trying to access your wallet from your browser do not just google it`s name. Another tip for you to achieve more secure way of operating with your wallet is bookmark page of your wallet`s site. It may prevent you from visitng other than your wallet`s site.

So, that means security of your funds depends not only on the wallet itself only, but on the way how secure your internet connection and your device. It is not recommended to access your wallet on public networks.

Online wallets are recommended to be used for the amount of cryptocurrency less than, for example, 100 BTC. If you are looking for a wallet to store more than this amount than you should use only offline method to access it and store it. This type of wallet was invented to make it possible to securely store such a big amounts of cryptocurrency.

Sometimes you may be needed a quick access to your funds, because of BTC/USD rate fluctuations or because of the other reasons. But despite all these security measures accessing your wallet is still may be made within short period of time.

There is no safest cryptocurrency wallet, but to achieve safety of bitcoin wallet it is required to do the following measures:

  • The Wallet encryption. Encrypting with a strong password is difficult to hack, but it does not give absolute protection. If there is a keystroke recording virus on your computer, your password may become known to an attacker.
  • Back up. It is important to back up the entire wallet. The fact is that some addresses are used to store changes in transactions and may not be visible to the user. That`s why it would be better to back up your entire wallet in several places.

Multipoles In recent years an increasing number of services that support transactions with multiple signatures. This method allows several users to partially sign one address with a public key, and if someone wishes to spend bitcoins, it is necessary that in addition to signing it, the transaction is signed by more people. How many signatures is needed, is established in advance, at the moment of creation of the address. This type of signature may be helpful in the case of mutual agreement between, for example, business partners or family members. If the same user has the second device, this device can also be the second participant.

Bitcoin transaction is a section of data confirmed by a signature of Bitcoin. It is sent to the Bitcoin network and forms blocks.  Transactions with Bitcoins cannot be reversed. Any transaction must be confirmed in the system several times to be processed.

One of the key features of wallet is allowing user direct interaction with the blockchain. In most cases your wallet is free, open-source, client-side interface, nothing more. That means your wallet is not a bank. Your keys are stored entirely on your computer, inside your browser. You and only you are responsible for your security. Wallets never transmit, receive or store your private key, password, or other account information. And they do not charge a transaction fee. When you see your balance on your wallet or view your transactions on etherscan.io, you are seeing data on the blockchain, not in wallet`s personal systems. The blockchain is like a huge, global, decentralized spreadsheet. It keeps track of who sent how many coins to whom, and what the balance of every account is. It is stored and maintained by thousands of people (miners) around the world who have special computers. The blocks in the blockchain are made up of all the individual transactions sent from MyEtherWallet, MetaMask, Exodus, Mist, Geth, Parity, and everywhere else.

So, in order to operate with your wallet effectively you need to understand that your wallet`s team or support cannot access your account or send your funds, recover or change your private key, recover or reset your password, cancel, or refund transactions or freeze accounts. Be diligent to keep your private key and password safe. Your private key is sometimes called your mnemonic phrase, keystore file, UTC file, JSON file, wallet file. If you lose your private key or password, no one can restore it.

After reading all this you may have a question “If my wallet can't do all those things, what's the point of it then?” This is because of decentralization and the blockchain. You don't depend on your bank, government, or anyone else when you want to move your funds. You don't depend on the security of an exchange or bank to keep your funds safe. If you don't find these things valuable, ask yourself why you think the blockchain and cryptocurrencies are valuable. If you don't like the sound of this, you may consider using Coinbase or Blockchain.info, they have more familiar accounts with usernames and passwords.

Here is some additional information about approaches against phishers. Phishers send you a message containing a link to a website that looks just like MyEtherWallet, EtherDelta and so on but is not the real website. They steal your information and then steal your money.

Install EAL or MetaMask or Cryptonite by Metacert or the MyEtherWallet Chrome Extension to block malicious websites. Don`t forget to check the URL. Do not click and check twice messages or links sent to you randomly via email, Slack, Reddit, Twitter, etc. Always navigate directly to a site before you enter information. Do not enter information after clicking a link from a message or email. Install an AdBlocker and do not click ads on your search engine, for example, Google.

Do not store your private key in Dropbox, Google Drive, or other cloud storage. If that account is compromised, your funds are most likely to be stolen.

It is always better to enable 2FA. Choose Google Authenticator over Authy. It is not safe to use your phone number. You need to be sure that your phone number is not tied to your Google account (you may look in privacy settings).

+For more security, you can run your online wallet for example MyEtherWallet on your computer instead of from the GitHub servers. The computer should have no internet connection. You can generate a wallet completely offline and send transactions from the "Send Offline" page. To do that start off by downloading the latest release of MyEtherWallet from

Choose etherwallet-vX.X.X.X.zip, to download the file. Copy this file to a USB device or something similar, in order to move it to your offline computer.

Plug the USB device into your offline computer and extract all files in the archive to the computer. You should now have a folder containing these files:

To open MyEtherWallet, double click the index.html file. This should open your browser. You will get a warning saying that it is unable to connect to the network, but this is completely normal. You won't be able to see your Ether or token balance through your local MyEtherWallet, but you can still use Etherscan or Ethplorer to see your balance.

I wouldn`t advise you to access your bitcoin wallet from another computer because your funds may be stolen this way, especially if you are not sure about the owner of this computer, but you may use second computer as written below.

When you are using MyEtherWallet offline and locally, you will not be able to send transactions from the offline computer. The internet connection is necessary to send or transmit a transaction. To do this, you should use a second computer, that is connected to the internet. This has the advantage that your private key never leaves the offline computer and malware has not ever steal your private key.

Start off by going to the "Offline Transaction" page on your computer connected to the internet and fill in your address. Please note that this is the address you want to send from, not to. The gas price and nonce will be generated for the transaction. Simply gas is payment for computation. The nonce is the number of transactions sent from a given address.

Next, go to your offline computer, open MyEtherWallet and go to the "Offline Transaction" page again. Fill in the “to” address and the quantity you want to send. Optionally, you can select a token to send from the list. Fill in the gas price and nonce gotten from step 1. If you fill in an incorrect nonce, the transaction will not happen.

If you just want to send a transaction to another address (not a contract) leave the gas limit at 21,000. Increasing the gas limit will not make your transaction verification faster. When you are transfering a transaction to a contract or including any additional data you have to apply more gas. Unused gas will be returned to you. If you want to include data with your transaction, also fill that in now. Unless you are specifically told to include data, you will likely not need it.

The next thing that we need to do is to sign the transaction, this is the part that requires your private key. To do this, you should unlock your wallet on the offline computer. On the "Offline Transaction" page, scroll down and access your wallet. You will see Generate Transaction button. Make sure that all transaction information is right and press the button. The raw transaction and the signed transaction should appear.

Finally, copy the signed transaction to your online computer. After signing a transaction, it is not possible to change any information of this transaction after that, so it is safe to copy it to another computer. Click the "Send Transaction" button and your transaction should be processed.

It is not safe to run remote-access software, for example, TeamViewer. And especially not on a computer with keys on them. The number of security holes in these programs is shocking. You 2FA your entire life, but then let a single string of characters give someone access to your entire computer and every account?

    1.1 Don't use brain wallet. Brain wallets are wallets where the key is derived from a word or phrase you choose yourself. Human brains don't have the ability to create high-entropy seeds. Using a phrase that you make up, even if it seems "rare" or "random" is not as secure as using MyEtherWallet's ability to create really random phrases and these phrases can be bruteforced by the millions.

Another possibility to loose access to your funds is typing sensitive information regarding your wallet on scam token sales and so on. So, google the service name + “scam” or “reviews”. Scam sites usually don`t last long. You may try to search for real comments by real people about this site. Collect information regarding it not only from a single source.

   1.2 Using more than one wallet may be more difficult as you will need to remember or safely store more than one private key or private key and seed words, but if you are using multiple wallets in order to diversify funds it may help you to improve your security. 

Hope we have answered all your questions regarding how to use bitcoin wallet safely.

In conclusion I may say that bitcoin wallets are safe themselves, but their security is mostly relies on owner of this wallet.