A pretty secure Cold Storage setup
To increase the security of your Bitcoin holdings, it is prudent to send them to an address, the private key of which has never been exposed to the Internet.
This kind of setup is called Cold Storage.
There are many ways to achieve this. Unfortunately, they are either relatively expensive, or you have to have somewhat advanced knowledge of computer systems.
The expensive route would be to buy a hardware wallet like a Trezor. It costs around $99. If you think this is not too expensive, stop reading right here and go buy one from their website.
The knowledge intensive way is to create a bootable Linux system on a USB thumb drive, start your computer from it and create from it the wallet for cold storage.
Here's a method which is not as good as having a dedicated hardware wallet, or a dedicated operating system, but it is still very secure.
Creating a pretty secure Cold Storage setup with your smartphone or tablet:
What you need:
- A smartphone or tablet. If possible, one that you don't care about factory resetting, like an old spare smartphone you don't use anymore anyway. If you don't have an extra device, use your regular phone or tablet.
- Pen and paper.
- Either factory reset your device, or if that's not an option for you, clean it up. Delete all the apps you don't need anyway. All the fart-apps, games etc. Get it as clean as possible.
- Install Mycelium, but don't open it yet (Available for iOS and Android)
- Go offline. Activate airplane mode. If you're paranoid, unplug your Wifi router and/or remove your SIM card.
- Now open Mycelium.
- Write down on paper the 12 word recovery seed and check if you wrote it down correctly. Also write on that paper the wallet you used and the date, i.e. "Mycelium, 31st of August, 2017". Years down the road, you might not remember which software in which version you used.
- Make a screenshot of the first address that is displayed to you. You can also copy it and paste it into some other file on your device. Or scan it with another phone or tablet. This is going to be your long term savings address.
- Secure the seed again on another paper backup. Store it securely, preferably off-site in case your house burns down. For example in a bank
safe deposit box, in an envelope that you hide in your grandma's
bookshelf, ... something like that.
- Now delete the wallet app from your device completely.
- Restart the device. Now you can go online again.
- To monitor the balance of your long term savings address, you can type it into Blockchain.info.
Accessing the Bitcoins you sent to that Cold Storage address:
- Do the same steps as before. The seed you create now will be referred to as "seed2". The previous seed that holds your bitcoins is referred to as "seed1".
- Now that you securely created seed2 with a new long term savings address, go online again and install Mycelium.
- Restore the wallet using seed1. You should see your bitcoin balance.
- Send the bitcoins to where ever you wanted to send them.
- Send the remaining balance to your new long term savings address that you created when creating seed2.
- Archive seed1. Never throw a seed away.
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