A cold storage guide

A cold storage guide

Several people expressed interest in moving their coin to cold storage but were completely unaware of how to even begin. So I wrote a quick guide to help you through it.

Cold storage?

Cold storage is the act of storing your Bitcoin public and private keys on physical media, generally kept somewhere hidden and safe such as a safe deposit box, a safe in your home, or buried in a box in your back yard. Once your bitcoin is transferred to this physical wallet it will be safe from hacks, but you alone are responsible for securing the keys.

Cold storage makes your coins inconvenient to access, so it is only practical for storing a large amount for a long time.

Creating your own wallet

There are many applications you can use to create your own wallet. I like Electrum due it its ease of use and 100% open source code. You can use any wallet you like, but this guide will focus on Electrum.

We'll use Electrum to generate a set of keys using a seed phrase. The seed phrase is 12 random words that we can use to recreate your wallet without having to remember the long private keys. It is very secure (there are 2048 words, which makes 5.444517870735 * 1039 combinations) but easier to work with than actual keys.

If you are paranoid about security (I won't judge) you may want to load up a live CD of a linux disto so that you need not worry about keyloggers or other potential malware spying on your seed phrase.

First, go download https://electrum.org/.

Follow this guide to create a wallet using a seed phrase, stopping when you get to the header "Funding Your Wallet" (my guide will take over from there):

https://bitzuma.com/posts/a-beginners-guide-to-the-electrum-bitcoin-wallet/

Keep your seed phrase safe. This is the only method you will have to access your wallet. Your seed phrase is worth the entire value of your investment. KEEP YOUR SEED PHRASE SAFE.

Funding your Wallet

Once everything is set up we'll transfer some coin into this wallet. I like to transfer the smallest amount possible just to test that everything is working as expected before moving the rest of my coin.

Go to the Receive tab and copy the Receiving Address. This is a public key and it can only be used to send money to your wallet. Take this key to your online wallet (coinbase, bitfinex, etc) and transfer 0.0001 btc (roughly $1.75 usd at the time of this post) to your Recieving Address. Depending on how busy the network is you might see this transaction immediately in Electrum or it could be an hour. Once the transaction is confirmed (and has a green checkmark next to it) we'll nuke our wallet and make sure we can restore it.

Deleting and Regenerating

In Electrum go to File > Delete and confirm that you want to delete your wallet. Electrum will close and your wallet will be gone.

Start Electrum again. Name your new wallet anything you want, it doesn't need to match the name you used when you first created your wallet. Select Standard Wallet, then I Already Have A Seed. Type your seed phrase in and click Next. You can use an encryption password if you like, but it will only affect the wallet while it exists on your computer, this encryption will not affect your ability to restore the wallet in the future using just the seed phrase.

If all went well Electrum will regenerate your addresses and sync with a bitcoin server. You'll see your 0.0001 transaction here. If you don't I'm not sure what to do since I've never had problems with it. This is why we are testing this with a small transaction. If you did something stupid like not KEEPING YOUR SEED PHRASE SAFE you will only be out $2 usd.

Wrapping Up

At this point you can transfer however much coin you want into the wallet through the Receiving tab. You may notice that your Receiving Address has changed. This is because an Electrum wallet contains several public/private keys that it treats as one single wallet. You can send your coin to the same address as the first transaction or you can use the addresses that Electrum rotates through. In theory using multiple addresses is safer due to the increased anonymity.

Once your coin is all transferred you may delete your wallet again. You coin will then exist only in your seed phrase. KEEP THIS SAFE. I have a mill and engraved my seed phrase on metal sheets that I keep in my safe and my parents' safe. I strongly recommend creating at least two copies in case shit goes sideways and one copy gets damaged. If you print your seed phrase make sure you laminate it and keep it somewhere that is fireproof. KEEP YOUR SEED PHRASE SAFE.

You can still add funds to this wallet using the receiving addresses used earlier. You do not need to use Electrum at all for this, all you need to do is send coin to the address. The glory of the blockchain is that your coin is tied to this address and you need the private key to spend it. Since your private keys are SAFELY STORED IN YOUR SEED PHRASE you need not worry about using your public key to send more coin to yourself.

Do not tell anyone where you put your seed phrase since anyone with that phrase can generate your wallet on any computer and consequently spend your coin.

This process may seem complicated, but if you read each step before doing anything you'll get to be perfectly comfortable owning your own coin.

Spending your coin from this wallet is a different story altogether and I'm not getting into that process now.

Nice guide man! Electrum is great.

Thanks for the guide :)

Spending your coin from this wallet is a different story altogether and I'm not getting into that process now.

Do you at least have a link to some place that explains it?

Do not tell anyone where you keep your seed

I keep my seed in a safe at my parents house and One in my house

Thanks super useful.

Good on you for putting this together. We've all got to remember that crypto is still in that odd growth phase where the tools aren't mature and the learning curve for newcomers who want to do things right isn't necessarily easy. Short practical guides addressing specific topics like this are a great community resource.

If I create a seed phrase on a different wallet (Mycelium), can I restore the wallet on Electrum, or are they app-specific?

Lol yeah, I kind of meant specifically, like telling my friend that I buried it under the apple tree in my back yard.

A few options to store your recovery seed onto metal http://bulletproofbitcoin.com

And what wallet would you suggest us to use?