Off The Grid — Bitcoin and Ethereum Storage

No matter how improbable the breach of a digital currency exchange is, physically owning some currency is a good idea.

Even with the improved security from folks like Coinbase with offline storage and their vault account type requiring multiple forms of withdrawal verification, it is still wise to diversify how you’re storing digital currency the same way it’s smart to have a portion for an emergency.

According to Coinbase founder Brian Armstrong’s post How Coinbase Builds Secure Infrastructure To Store Bitcoin In The Cloud

Coinbase early on made a decision to store the vast majority (98%+) of customer bitcoin entirely offline...

What is Cold Storage?

Cold storage is storing digital currency offline. A simple method of offline storage has been creating a paper wallet. An image that can be printed onto paper with a Bitcoin or Ethereum wallet consisting of 2 ‘keys’. The public key (your wallet address / how other people send currency to you), and the private key (how you send currency). These paper wallets can be physically printed or saved as a file.

Companies have developed devices specifically for storing digital currency offline. These hardware devices are the easiest way to store offline, transport, and send / use digital currency for purchases. Devices include KeepKey, Trezor, and Ledger. I didn’t go this route because the devices above are only compatible with one or two currencies. I wanted a solution compatible for both Bitcoin and Ethereum, as well as a storage solution not just for digital currency, but for all of my documents, photos, and content.

Alternatively, rather than storing everything on a piece of paper or a standalone digital currency hardware device, you can generate a paper wallet, and then store the pdf on an encrypted (password protected) solid state drive (SSD). An SSD is almost as portable as paper, yet more secure, durable, and versatile than a standalone digital currency device.

Advantages

Protection from malware and keyloggers.

Maintain 100% ownership of your private keys. You own the coins not a 3rd party service.

No dependence on the security of any website.

Keeping a piece of paper safe is easier than keeping your computer secure.

Disadvantages

The paper contains everything needed to spend the coins and must be kept physically secure.

How To Setup A Paper Wallet For Cold Storage

Before you start, you can enable a VPN on your computer and phone for security while generating your wallet and making transactions. I use Zenmate’s Mac app and Android app (also on iOS).

Choose a Solid State Drive — Part 1 of 6

The Wirecutter has a review of The Best Portable Hard Drive. I went with the 500gb Samsung T3 because of it’s portability, and USB-C port which works with my phone and computer. Make sure to encrypt it with a password. Most SSDs have software that will prompt you through the password setup.

There’s also a Samsung T3 Android app to access files directly from your mobile device.

If you plan on using your SSD with a smartphone I recommend plugging your SSD into your smartphone before starting the process below. I realized that I needed to reformat my Samsung T3 in order to work with my Google Pixel phone so I had reformat my T3 (meaning everything needed to be erased and re-downloaded).

Generate a Paper Wallet — Part 2 of 6

Wallets can be generated while connected to the internet or while offline. To improve security, it is better to do so offline.

Bitcoin: You can generate a Bitcoin wallet using bitaddress.org or downloading from GitHub and running offline by opening the bitaddress.org.html file from the project in any web browser.

Follow the instructions by moving the mouse around or typing random characters in order to generate the random key. The percentage will reach 100% once the random keys are done generating. Then select the paper wallet tab. You can adjust the number of wallets created by changing the Addresses to generate.

Ethereum: You can generate a Ether wallet using MyEtherWallet.com or downloading from GitHub and running MyEtherWallet offline by opening index.html file from the project in any web browser.

You can generate a wallet completely offline and send transactions from the “Offline Transaction” page.

MyEtherWallet.com is now running entirely on your computer. After generating the wallet you need to click download for the Keystore File in order to press continue. However, you only need either your password, Keystore File, or private key in order to access the Ether from your wallet.

Save Wallets to a Solid State Drive (SSD) — Part 3 of 6

Once the wallets are generated select print > Open pdf in Preview if you’re using the Chrome browser on a Mac, which generates a nice PDF of your new wallet. Now you can save the wallet directly to your SSD.

Deposit Currency Into the Wallets — Part 4 of 6