Yesterday I came across this news https://cointelegraph.com/news/bitcoin-investor-loses-50000-as-his-wallet-backups-get-damaged-by-fire# about a trader who invested in Bitcoin lost all his investment 17 btc equal to $50K nowdays. Some people miss understood the news why these kind of news have to appear or Does we lack of news ? In my point of view I don’t think so
But these news underlined a basic principle when people would like to invest in bitcoins they also need to understand type of wallet being used in the article above he already do the back up but he did a reckless things by putting his USB drive and paper wallet near the harddisk; that’s why in course to be a CBP or online course about bitcoin the educator always remind after backup put the cold wallet in a safe place → what the hell this words means?
courtesy of the bitcoin forum
Ok let me back to this point , to save your bitcoin you need to understand cold wallet and hot wallet , here’s the definitions of hot wallet and cold wallet :
- Hot wallet : A wallet that always connected to the internet a wallet that using password and could be accessed at any time have high fluidity eg: wallet that being used in an exchange and being used for daily transaction like bitcoin.co.id, luno.com, kraken, etc
- Cold wallet : A wallet that are not conenccted to internet because it’s save in your harddrive, USB or in paper forms that has blockchain code, have a certain amount of bitcoin inside it. There’s also bitcoin enthusiast who put their bitcoin in a chips and those chips implant in their hand.
These 2 wallet also can be connected offline through synchronizations and when hot wallet conencted to internet again make sure hot anc cold wallet connections being off.
So if you hold quite a big amount of BTC and not using it for trading it will be wise to save it in cold wallet.
courtesy of alan reiner -slideshare
And even we come to this point there’s few consideration in choosing the wallet; type of wallet we prefer and ease of use , should you used seed, brain wallet or using passphare. Each wallet also have a system called BIP (Bitcoin Improvement Protocol) within it okay it seems too technical but these BIP also protect your wallet from brute force crackers.
The safest one if you hold bitcoin for future invest secure it in paper wallet and lock in your safe, so far people haven’t found another method of backing things up yet.
example of printable paper wallet. courtesy of wikipedia
Will cover more on the next article and if there’s questions or advise; do not hesitate to let me know.