Past few years were very shaky for the world economy and things don’t seem to be getting any better with the USA debt increasing by the day and Russia treating to become the new regulator together with China. All this led people to jump on the newly presented alternatives called cryptocurrency. A big movement is forming of people laying more and more trust into the virtual currencies rather than the bank and government regulated ones. The advantages are numerous, fast international transactions, low fees, anonymity just to name the most valid. But as something quite new, there are also challenges to be aware of, one of which is security. One case is when the value of your currency of choice goes up and down as cylinder piston, another is when you or your exchange of choice get hacked.
A new generation of malicious software has appear that searches for wallets working on your machine. Big currency exchange web sites get target as MtGox, Bitstamp, FlexCoin. Exchanges have replied back with settings strong security with double authentication, e-mail confirmation etc. Btc-e and Bitsamp both as for e-mail confirmation before executing any withdraw orders. Mt.Gox was offering a special electronic One Time Password Card (OTP card) for double protection.
Yet, if you are paranoid like me, probably you would probably trust only yourself and nobody else. For people like us, there is the offline or otherwise called cold storage options for cryptocurrencies. Remember, this is storage, not wallet, so it’s an option when you are expected to lay low and not spend anything at all.
I have both Bitcoins, LiteCoins and DogeCoins. Bitcoins are the most popular and with the highest value (currently 1btc = 590 usd). Litecoins were created latter than Bitcoins but got a couple of advantages as for example they can be more than the 21 million bitcoins limit (also read – A $100 Worth Of Litecoin A Year Ago Is Worth $30,000 Today). DogeCoins – well you just need to own some of it, for the lulz.
Here are some steps to follow in creating a cold btc storage:
1. Download the web page BitAddress.
2. Take out the HDD from your computer/lap-top
3. Start Ubuntu from a live CD
4. Keep the internet switched off
5. Start the downloaded BitAddress page in FireFox
6. Generate a wallet and write down the address and the private key. Write them on peace of paper, save them on a encrypted text file on USB stick – just do whatever you find right, but keep few sources on different places.
6.1. If you made a usb with the upper information, than don’t ever plug it to a computer with active internet connection
7. Go online and transfer your bitcoins to the newly created address.
8. Use BlockChain.info – to check the balance of your wallet.
Use the private key when you want to withdraw all funds from the cold storage. You can do that easily through Block Chain’s wallet services.
Now, this is one option you can do for btc, but there is another, which can be applied also for Litecoin and Dogecoin wallets.
1. Install Bitcoin Core software or Dogecoin, ltc
2. Sync with the network – for bitcoin that means downloading 26gb of data, ltc is about 3,5gb and Doge – 100mb.
3. Encrypt your wallet
4. Create new address and send your coins to it
5.1. This file has the information for all your transactions, private keys, addresses etc. Remember to keep the password for encrypting your wallet somewhere on paper.
I don’t advice you in using the second method for btc, as it really takes a hell of a time to download those 26gb, which actually gonna increase constantly. I also know that there are other methods for storing your coins, through using special devices, software etc, but here I wanted to share with you an easy method that seems quite straight forward to me. What do you think?
Instruction video – How To Store Your Bitcoins Safely (Offline, paper wallets)
Easiest way to obtain LTC is by buying them for BTC on Btc-e.com