Storing Bitcoin securely is crucial to protecting your life savings. A loss could have fatal consequences. In this article, you'll learn what options there are for storing your Bitcoins safely and at what amount you should take special security precautions.
Introduction to Bitcoin Storage
Bitcoin is a digital currency that's becoming increasingly popular. However, as Bitcoin ownership grows, so does the risk of loss due to theft or technical errors. Therefore, it's important to educate yourself about appropriate security measures.
When should you think about storage?
The question of when to start thinking about safekeeping Bitcoin depends largely on the amount you own. If you have more Bitcoin than you'd carry in your everyday wallet, it's time to consider additional security measures.
- If you have less than €50 in Bitcoin, a simple hot wallet might be sufficient.
- If you have between 50 and 500 euros, you should consider a secure wallet.
- From 500 euros onwards it is time to take serious security measures.
Wallet units and their importance for security precautions
Wallet units are the measure that indicates how much Bitcoin you are willing to carry in your wallet. This classification helps classify different security requirements and find a suitable wallet solution.
Wallet Unit 1: Hot Wallets
For storing up to two wallet units, a hot wallet, such as the Castodial wallet, is sufficient. This is a wallet that runs directly on your smartphone or PC. However, security should be enhanced with a PIN and, if necessary, two-factor authentication.
Wallet Unit 2: Increased security measures
If you have three wallet units, it's recommended to switch from a hot wallet to cold storage, such as a hardware wallet. Hardware wallets offer an additional layer of security by storing your Bitcoin offline.
The right choice of security measures
Choosing the right wallet depends on the amount of Bitcoin you own. Here are some rough recommendations:
- For 1-2 wallet units: Hot wallets are usually sufficient. e.g. BlueWallet or Blink
- For 3-10 wallet units: A hardware wallet is recommended to store your Bitcoins securely. e.g. Specter DIY
- For more than 10 wallet units: Multi-Signature Wallets provide additional security by requiring multiple keys to approve transactions.
Percentages of your savings
If you're considering larger amounts, it's a good idea to consider your Bitcoin holdings as a percentage of your total savings. This can help you develop the right security strategy.
- 10% of savings: A simple hardware wallet is sufficient.
- 30% of savings: Here you might want to invest in a multi-signature wallet.
- 50% or more: A combination of hardware wallet and Steel wallets for backup is advisable.
The importance of backups
Regardless of the wallet you use, it's crucial to create backups of your seed phrases. These should be stored in a secure location to ensure you have access to your Bitcoins in case of loss or theft.
Conclusion
Storing Bitcoin safely requires careful consideration and planning. Depending on the amount you own, there are various security measures you can take. While hot wallets are sufficient for smaller amounts, you should consider serious security measures for larger amounts. Do your research and choose the right solution for your needs.
If you have any questions or would like to learn more about specific security precautions, don't hesitate to ask in the comments.
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