- New? Ignore the Bitcoin Core full node wallet for now (for intermediate users).
- Learn why a full node is good for you here.
- You can run a full node on Android devices with ABCore (for intermediate users).
- Hardware wallets are physical electronic devices used to store/spend bitcoin in a way that private keys never get exposed to the internet.
- An infected device that connects to a hardware wallet cannot access the bitcoin but it can swap the "send to" address with one of theirs, so make sure you double check the address.
- Use a Bitcoin wallet to securely store bitcoin and if you will transact on an infrequent basis.
- Use a lightning wallet for frequent smaller valued transacting such as shopping online, tipping, etc.
- Lightning wallets also have an integrated Bitcoin wallet.
- Not all Bitcoin services & merchants have lightning integrated yet.
- Learn about Lightning here.
Basic functions of a wallet allow you to:
1) send & receive bitcoin
2) create a wallet password
3) create a back-up of your wallet
To send bitcoin, copy & paste the receiver's bitcoin address into the "send to" field of your bitcoin wallet.
Sending bitcoin has a transaction fee. Fees should be handled by the wallet software, so you shouldn't need to worry about fees as a beginner.
- Bitcoin addresses in QR code format can be scanned with a bar code scanner such as a mobile phone to auto-fill the address and/or amount requested.
Bitcoin uses unique bitcoin addresses generated by the wallet to receive bitcoin.
To receive bitcoin, give a bitcoin address generated by your wallet to the sender and the sender can copy & paste the address into their wallet's "send to" field.
- Wallets can generate as many different bitcoin addresses as needed.
- Wallets can generate bitcoin addresses while disconnected from the internet and they will still work.
- Wallets can generate QR codes for senders to scan and automatically fill in the bitcoin address and/or amount requested on their wallet.
Most wallets ask you to write down a list of 12 or 24 words known as a "seed phrase" during setup. These words will recover your wallet.
Other less common back-up methods:
1) A back-up file - this method backs up the entire wallet.
2) A private key - this method only backs up the associated bitcoin address.
- The order of words in a seed phrase is very important. Record words in the exact order that it was given.
- A seed phrase can be generated by a wallet while being disconnected from the internet.
If your wallet gave you a seed phrase during setup, it can recover your wallet by simply typing the words in to your new wallet.
- Seed phrase must be typed in the exact order it was given for restoration to be successful.
If you are new or very cautious, try:
1) Sending a test transaction to the wallet first. Just a small amount. Then check if your wallet received the bitcoin.
2) Doing a test back-up and restore. Test with a small amount of bitcoin first and don't wipe your existing wallet with funds on it when testing. Test restoring on another device or as another login user for the operating system.
- The same wallet can exist on multiple devices.
Separate the bitcoin you plan to spend/shop with from the bitcoin you plan to store long-term.
In other words:
1) Store medium to large amounts you plan to hold for long term offline or at minimum on a hardware wallet.
2) Keep lesser amounts you intend to use for things like shopping on a wallet connected to the internet like a lightning wallet.
If you want to increase your privacy, avoid re-using bitcoin addresses to receive bitcoin.
Storing Bitcoin offline should be for long-term holdings and/or medium to large amounts.
The most common back-up/ restore method for wallets is a 12 or 24 list of words called a seed phrase.
The key to cold storage is setting up a new wallet on a device that is disconnected from the internet like a desktop pc. As a result, your seed phrase is generated offline and you can secure your seed phrase in a way that suits you best. This can include a dedicated offline pc, writting it down, saving it in USB drives, leaving hints, storing it in a personal vault or a bank vault. I'll explain some options below. You may find a combination of these methods may make sense to you.
- Dedicated offline computer:
Requirements: Offline PC, Online PC, USB drive (PC doesn't need to be powerful)
1) Prepare a clean computer that you want to delegate as your dedicated offline pc. Ensure the internet is physically disconnected from the computer and never gets connected.
2) On a different computer that is connected to the internet, download a Bitcoin wallet and move the installer file to a USB drive.
3) Now, plug in the USB drive into your dedicated offline pc and install the wallet.
4) Open the wallet and go through the intital setup process. For most wallets, during this setup process the wallet will generate a 12 or 24 word seed phrase for you to back-up and secure.
5) Write down the seed phrase somewhere private or make a copy of it on your USB drive. You'll also want to write down or make a copy of the wallet password you created. Now make a plan to have multiple back-ups of the seed phrase and wallet password and how you want to secure it for the long-term.
6) When you're ready and comfortable, proceed to send bitcoin to the wallet. You can even send a small test transaction first, then check the bitcoin address on a Bitcoin block explorer.
7) Once you are ready (and if you want to), you may delete the wallet data (and empty the trash can) so that the wallet is at an empty state. You can restore your wallet in the future with your seed phrase.
Note: If you want to send bitcoin from your wallet while remaining disconnected from the internet, you can do this using a method called PSBT. Electrum is a wallet that can perform PSBTs. Link to a guide provided below.
- Electrum Offline Transaction (PSBT) Guide
- Physical material:
You can write down your seed phrase on a durable, disaster resistant material with a permanent long lasting ink. Or you can also buy durable products designed to store your bitcoin seed phrase for a long time.
If you need to access the bitcoin, simply enter your seed phrase into the wallet's restore feature (preferrably done on a dedicated offline pc)
- Metal Bitcoin Seed Storage Stress Test (Part II)
- Google Search: buy bitcoin seed phrase storage
- Encrypted USBs:
You can store your seed phrase on multiple encrypted USBs.
Make sure you encrypt the USB with a difficult password and have multiple encrypted back-up USBs because they can break or become corrupted over time.
This method requires some extra maintenance and routine check-ups to ensure USBs are in working order. You should probably add new encrypted USB drives to the pile once in a while as well.
Don't forget the password to the usb(s), find a private and secure location to store the USBs and only access the usbs through a clean computer, preferrably a dedicated offline PC
- Hardware wallet:
A hardware wallet is a physical electronic bitcoin storage device that is disconnected from the internet. It allows you to more easily and safely spend your bitcoin in cold storage
A hardware wallet connects to a device such as a computer or smartphone via a technology like USB and allows you to securely send your bitcoin.
A hardware wallet will generate a seed phrase for you to back-up in a secure manner.
“Bitcoin is a remarkable cryptographic achievement and the ability to create something that is not duplicable in the digital world has enormous value.”