The issue of safe storage of money is always relevant, and nothing has changed with the advent of cryptocurrencies. The owners of bitcoins (and altcoins) are also threatened by the loss of their honestly accumulated or mined funds, because hackers are on the alert - and therefore today we will talk about ways to store cryptocurrencies in general and bitcoins in particular.
Where do ordinary users usually keep money? In wallets. How to store Bitcoins and other cryptocurrencies? Accordingly, in virtual wallets. There are plenty of ways to store Bitcoins and other cryptocurrencies in wallets, and we will tell you about everything in simple language so that you can choose the right one. Because there is no wallet - no bitcoins.
And no, the danger here is not exaggerated at all - for the last couple of years, not a single method of attempting to attack servers that store bitcoins, and moreover - some of them have been successful, has been known. However, the methods of protection are also being improved, which gives some hope for tomorrow.
Cold hot
Two terms that need to be recognized at the very beginning are “cold wallet” and “hot wallet”. What is it? A hot wallet is a cryptocurrency wallet that is constantly connected to the Internet (for example, on your computer), it maintains an active connection to the Bitcoin network, and you can spend money from it at any time.
And you probably already guess that a “cold wallet” is the exact opposite of a “hot” wallet, it is not designed to regularly send cryptocurrency, it does not have a direct connection to the Internet, since it is used to store bitcoins offline. Accordingly, hackers cannot steal funds from it - therefore, it is recommended to store the bulk of the cryptocurrency in a cold wallet. And often, users simply place a small amount of cryptocurrency from each transaction on a hot wallet for daily needs, leaving everything else in a cold wallet. In simpler terms, a hot wallet is like a checking account, and a cold wallet is like a savings account.
This article can be divided into two parts: software wallets and hardware. Moreover, the storage methods in software are orders of magnitude larger, therefore we will spend more time with them.
Wallet on your computer
The most logical option is to have a local wallet. They come in two varieties: "thick"/"heavy" and "thin"/"light". The difference between them is that the former download the entire blockchain - which means you will need a lot of space to store this data on your very powerful computer (not very powerful? Sadness, trouble). The second - "light" ones - request the blockchain from third-party services and do not require downloading and storing it.
The most obvious choice in this situation is the “official” client of Bitcoin Core, which is developed and promoted by the non-profit organization Bitcoin Foundation, which unites kernel developers. This client is from the category of "heavy", it serves transactions, allows you to create a Bitcoin address for sending / receiving Bitcoins and stores the private key.
Also popular is the Armory wallet, which works on top of Bitcoin Core and extends its functionality: but it is suitable only for experienced and advanced users.
If a “heavy” wallet does not suit you, then you can choose a “light” wallet - for example, Electrum, which is considered the best in this category, because it makes it possible to use not only bitcoins, but also other cryptocurrencies, such as litecoin. After installation, it only asks you to select a server and gives you a passphrase that you need to write down or print out in order to use it in case you lose your password.
There are wallets for other operating systems other than Windows: Hive runs on OS X, Multibit uses Linux (and OS X, and Windows too), and DarkWallet generally offers a browser extension with bonus features like bitcoin mixing.
Mobile wallet
In fact, this is a smartphone application that stores the secret keys of your Bitcoin addresses and allows you to pay directly from your smartphone (the question of "where to pay" is beyond the scope of this article). Some wallets can use NFC, allowing you to not enter any information, paying by attaching a smartphone to the reader - almost like Apple Pay or Samsung Pay.
True, a huge drawback of a mobile wallet is that it is not a full-fledged bitcoin client. It must load and store a constantly growing blockchain of several gigabytes, which will lead not only to higher mobile phone bills, but also to the fact that the memory in your gadget runs out pretty quickly, even if you can use SDXC or 128 GB memory cards Internal memory (as in older iPhones, for example).
Bitcoin online wallet
Online wallets store secret keys on the Internet on a server of a third-party company - the user cannot control this. There are several such services, they can be used for mobile wallets and computer wallets - for example, to synchronize data between these devices.
This method can safely be called the most unreliable.
Such a server is convenient for hacking by hackers, it can be organized by ordinary scammers (who one day will simply disappear with your virtual money). The service stores secret keys on the Internet: on a server that you cannot control. Of course, they also have advantages - ease of use; You can access your wallet from anywhere and from any device. Is it worth the convenience of security - everyone decides for himself.
Today, there are several proven solutions of this kind - for example, Coinbase (it is also an exchange), Circle, Xapo, Blockchain.info, Strongcoin; the latter offers the so-called "hybrid wallet", when private keys are encrypted right in the browser before being sent to the server. However, again, they can be called "tested" today; what will happen to services tomorrow, no one will say.
Paper wallet
With all the improbability of the name of this method it can be considered one of the most reliable methods of "cold" storage. And at the same time - one of the simplest.
And it lies in the fact that you simply print the wallet on paper, where the Bitcoin address and the picture with the QR code are written. Reading the code, you can import it into a Bitcoin client on a computer and get access to your funds: the storage from the “cold” magically turns into “hot” and you can spend virtual money. And the paper itself can be stored anywhere: even at home in the volume of Leo Tolstoy (the first volume of War and Peace is unlikely to be read by thieves), even in a bank box.
Hardware wallet (offline)
One of the most advanced methods for storing bitcoins is a hardware wallet. It is a small electronic device that is easy to put in your pocket — you keep your secret keys on it in such a way that they cannot be removed. Basically, this wallet is similar to a regular computer without the Internet; however, you can insert it into a computer connected to the Internet.
This method is good at low risks - even if the computer to which you connect such a wallet is infected with viruses, you are still safe. Sending bitcoins through a software wallet, you sign a transaction using a hardware - by simply pressing a button. The latter stores the secret key and uses it to sign the transaction.
Thus, this method can be called one of the most secure, since your private keys are not exposed on the Internet. And bitcoins or other cryptocurrencies are always in cold storage. The main disadvantage of this method can be called, perhaps, that if you lose your device, you can also lose your funds - but hardware wallets provide for the possibility of restoring access to the address using a pre-recorded phrase. The second disadvantage can be called the fact that there is still no information about the durability of these devices.
Today, Trezor hardware wallet is actively promoted - it will be useful for those who have large reserves of cryptocurrency, and who do not want to rely on third-party services for storing bitcoins or such impractical online storage. Also from other hardware solutions we can mention the Ledger USB Bitcoin Wallet (token with integrated smart card), KeepKey, Dash and others.