Topic: Understanding Cold Storage (Read 1376 times)

I use paper wallets for cold storage of bitcoins that I don't expect to spend within the next 3 months, and for providing escrow for transactions.

I use Armory offline for a secure PC based wallet to hold the bitcoins that I think I might want access to during the next 3 months.

I use an android tablet running blockchain.info to hold bitcoins that I expect to spend within the next 48 hours.

If I receive bitcoins while I'm away from home, I use blockchain.info to receive them, and then I transfer them either to an Armory address or a paper wallet when its convenient.

what wallet are you using now?

Yes. The wallet.dat is where your private keys are. Everything else is not important. This is only true for bitcoin core though. Other wallet programms or services work differently. E.g. blockchain.info online wallet gives you a set of words like this
that you need to remember. You can actually try these words, its for an account I made for testing, have fun with it.

sorry, i mean when i want to move my wallet to another pc or laptop, what i need to do is just copy wallet.dat and import it?

Wallet.dat is the file that Bitcoin Core uses to store all the private keys that Bitcoin Core is using, and a list of transactions that were sent to or from that list of Private Keys.

If you remove that file, then you are removing the private keys.  If you replace that file you are replacing the private keys.  Bitcoin Core also has functionality to add other known private keys to the wallet.dat. This allows you to manipulate the set of addresses that Bitcoin Core has control over.

nice!, another question 

it's about wallet.dat.
1. What is that?
2. I saw at another thread, once he installed the wallet (e.g Bitcoin Core), he copied it (wallet.dat) to another removable media, then he just delete the OS. why?
3. So wallet.dat is "Removable Wallet"?

Correct. Thats the whole purpose of the private key and thats why you must keep them private (hence the name). The only reason you have the coins in the first place is because you know that secret and can easily make the public key from that secret. Makeing a private key if you only know the public key is very hard (currently considered impossible).

so if someone have my private keys it means he can easily transfer my money to his address without any confirmation from me?

I just saw your site.

Isnt cold storage supposed to be no internet related?  So like not even uploaded onto a server network / cloud.

Click on one of the links I gave you.

Enter your bitcoin address.

See the balance that is controlled by that address.

What part don't you understand?



Air gapped means not connected by any electronic means.  Armory and Electrum offline both allow you to run two computers. One computer is connected to the internet.  The other computer (which stores your private keys) is NEVER connected to the internet, or to any other computer that is connected to the internet.  You have to physically move data from one computer to the other with a device (such as a flash drive or CD) or by typing it in.  Essentially you are physically carrying the data through the air.


Yes.

But in this case we are talking about how to spend it AFTER you sent it all to your offline storage.  When you want to retrieve some of it from offline storage, because you need to use some of it.


Paper wallet is a form of cold storage.  It is a way to store your private keys that can't be accessed from the internet.  At the most simple, it just means having the private key written on a piece of paper.  More commonly, to make it more useful, both the private key and bitcoin address are printed on the paper.  They are often printed in both human readable text, AND with a QR-Code making it easier to get the information into a computer.


Correct.  Bitcoin Core running encrypted on a computer that is connected to the internet is NOT cold storage.  That is a "hot wallet".


It shows your private key, and your bitcoin address.

The bitcoin address can be given out to anyone allowing them to send bitcoins to that address and increase the balance of bitcoins that can be controlled with the private key.  The private key is used in the future when you need to access (send/spend) the bitcoins that have been sent to that address.


With bitcoin, any time you send bitcoins anywhere you are "spending" them.  It is the technical term used in englich to describe the process of creating a network transaction that moves control of bitcoins from one private key to another.

how about if i live in a country or a place that doesn't buying or selling with bitcoin. What's the purpose of having paper wallet then?

Your public key can be scanned by a QR code reader and you can spend it using the private key. It is the most secure way to store large amount of bitcoin.

so what's the main function of having paper wallet then?
is it only shows your public and private key? or what?

No, cold storage means to create a wallet that is offline and the device that generated it have never and will never touch the internet. It is a good way to ensure top security, hackers cannot access your offline device but if they have your encrypted wallet on a computer that is online, it is possible that they can somehow crack it. A good example of cold storage is paper wallet.

so do you mean having cold storage for example Bitcoin Core doesn't mean we have encrypted or secure wallet?

Cold storage in the context of Bitcoin refers to keeping a reserve of Bitcoins offline.

For example, a Bitcoin exchange typically offers an instant withdrawal feature, and might be a steward over hundreds of thousands of Bitcoins. To minimize the possibility that an intruder could steal the entire reserve in a security breach, the operator of the website follows a best practice by keeping the majority of the reserve in cold storage, or in other words, not present on the web server or any other computer. The only amount kept on the server is the amount needed to cover anticipated withdrawals.

Methods of cold storage include keeping bitcoins:

On a USB drive or other data storage medium in a safe place (e.g. safety deposit box, safe)
On a paper wallet
On a bearer item such as a physical bitcoin.
Online, but on encrypted media where the encryption key is offline.
Use a offline Bitcoin Hardware wallet (So far only Pi-Wallet is operational.)
Deep cold storage refers to keeping a reserve of Bitcoins offline, using a method that makes retrieving coins from storage significantly more difficult than sending them there. This could be done for safety's sake, such as to prevent theft or robbery.

Because Bitcoins can be sent to a wallet by anyone knowing the wallet address, it is trivial to put a wallet in cold storage but to keep a copy of the addresses needed to send funds to it.

A simple example of deep cold storage is opening a safety deposit box and putting a USB stick containing an encrypted wallet file in it. The public (sending) addresses can be used any time to send additional bitcoins to the wallet, but spending the bitcoins would require physical access to the box (in addition to knowledge of the encryption password).

Deep cold storage would typically be used for holding large amounts of bitcoins, or for a trustee holding bitcoins on behalf of others. In such a case, additional precautions should be taken beyond a simple example of a single safety deposit box.

The box could be accessed by bank or maintenance personnel, so the contents of the box alone should not be sufficient to access the wallet.
The box could be stolen or destroyed in a disaster, or the media could become unreadable, so the box should not contain the only copy of the wallet.
The trustee could die or become incapacitated. If access to the wallet or knowledge of its location is lost, or encryption passwords are lost, the bitcoins are gone forever. Provisions should be made so that the box can be accessed by someone else as appropriate, including any encryption passwords.

i don't really know the function of having paper wallet
for transactions? buying pizza using bitcoin's paper wallet?

could "sending all your bitcoin to your offline storage" means spent?

air gapped? sorry, Indonesian

i mean, honestly, i don't understand