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When it comes to self-custody of Bitcoin, there's an inevitable fact: the responsibility lies with you. You're responsible for your funds, for protecting them, for everything. It might be a daunting prospect, but there are some straightforward ways to achieve self-protection.
Protecting your Bitcoin can be likened to building a house. First, you lay the foundation, then you build a framework, then you fill in the walls, insulation, utilities, etc. For each piece of the house you want to add, you need to properly finish the previous one, or else the entire house will be unsafe and unstable.
When it comes to Bitcoin security, your seed phrase is the foundation of your security. It's also the most crucial yet potentially vulnerable point of security. Just like the foundation of a house affects its stability, your seed phrase affects the security of your wallet.
So, how do you securely store a seed phrase? When figuring out how to protect your seed phrase, here are some core factors to consider.
Sharing is terrible
Your seed phrase is your money. Every private key needed to authorize spending, every address in your wallet, every Bitcoin account: all of these are generated by your seed phrase. Anyone with access to your seed phrase can access any funds stored in that wallet. Therefore, creating and ensuring backups of this seed phrase is essential.
If your hardware wallet or device with installed software wallet encounters issues, your only hope is the backup seed phrase. If you lose the backup seed phrase, you lose your money. When self-custodying funds, there are two ways to access your funds: your wallet you're using and the seed phrase backup. Your Bitcoin wallet protects copies of your keys on that device, but it can't help protect the seed phrase backup.
You should not allow anyone to access your seed phrase; although it sounds harsh, you can't guarantee they will handle it responsibly. They might still misplace your seed phrase or put it in an insecure place, without any malicious intent.
So, Rule One: Never share your seed phrase with anyone. Any exceptions to this rule should be carefully considered before breaking it. After all, too much trust might put your Bitcoin at risk.
Computers are not your friends
Avoiding recording the seed phrase in any digital format is crucial. Computers are highly complex machines, thus prone to a series of security issues. People's devices often fall victim to hacker attacks. With digital storage, copies of the seed phrase might be at risk. In short, your laptop or smartphone is vulnerable to malware and spyware attacks. If hackers gain access to your device, they might be able to read your files and extract your seed phrase from any type of digital storage they can access. Therefore, you should avoid storing the seed phrase in a digital format.
This especially applies to storing anything in remote digital services (such as cloud storage providers). If your email account has ever been compromised, hackers could use your credentials to log in to any cloud storage service and access your seed phrase.
In any case, you should not:
Store your seed phrase on cloud storage websites like iCloud or Google Drive
Take photos of it with your phone or other digital cameras
Send it via any digital media, such as email or text messages
Input it into anything other than the Bitcoin wallet you are using
Speak it out loud in front of a microphone
Your seed phrase's only copy should be physical and completely isolated from the internet.
That's why it's not recommended to store significant amounts of Bitcoin in software wallets on computers or phones. Simply put, your internet-connected devices are vulnerable to hacker attacks. Therefore, if you want to protect the security of Bitcoin, you should invest in a hardware wallet.
Using a durable seed phrase backup
When it comes to backing up your seed phrase, you should make an important decision: what do you write it on? This might seem like a silly question if you're new to the field, but unless you stop using Bitcoin, you'll need to protect your seed phrase for the rest of your life.
Durability is crucial. You can write your seed phrase on a piece of paper and then stuff it in a drawer, but how safe is that? Paper is flammable: it degrades. If you spill water on it, the ink might bleed, making your backup unreadable. Paper isn't suitable for long-term storage.
Metal is a better choice, with many products on the market designed to store your seed phrase on metal. Some solutions use tiny metal tiles with letters, so you can slide them into a frame and lock them in place to record your words, like BillFodl.
Metal tile backups are reusable, so over time, if you generate and move to a new wallet, the same backup tool can be reused for the new seed phrase. If needed, the backup can also be easily "destroyed" by removing the tiles. If you move somewhere and there's a risk of it being found by someone else, you can't carry the backup with you, such as through an airport, you might not want the backup to remain intact.
Other metal backups use etching tools to scrape or stamp the words directly onto a flat metal surface, providing stronger protection against threats like fire. This is very secure, but destroying copies of the seed phrase etched on metal is very difficult. To truly ensure it's destroyed, you'd have to grind off the entire surface of the metal plate until no traces of the words remain.
Lastly, there are capsule-based solutions. These tiles use small steel tiles with letters on top, but they don't slide into a flat frame; instead, they're inserted into a steel rod wrapped around a pole to secure them in place. This can provide the benefits of reusable backup while ensuring any warping from fires won't disperse and move the letter tiles.
When picking between metal tiles or steel plates, carefully weigh the pros and cons of each. But remember: go with something made of metal. Don't entrust your Bitcoin to a fragile piece of paper.
Physical security
Now that we've figured out how to store the seed phrase, where should you store it? It's essential to put the seed phrase on sturdy material, but it's also crucial to put it in a place that's hard to access. It should be stored in a lockable place, such as a safe or lockbox. A safe is better than a lockbox because it's larger and harder to carry around. A safe attached to a wall is even better, requiring breaking through walls to remove the safe.
If you don't have a safe or lockbox, keep your seed phrase out of sight. Put it in a filing cabinet or desk drawer, in a room that others |
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Post time 12-4-2024 13:38:58