How to store significant amounts of Bitcoin
How to store significant amounts of Bitcoin
Bitcoin

How to store significant amounts of Bitcoin

By Marco Cavicchioli - 19 Oct 2021

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Those who hold significant amounts of Bitcoin should be very careful how they store them.

Lopp and advice on how to store Bitcoin 

There are basically two options, but both are not as trivial as it might seem. 

In theory, Bitcoin was created to allow its holders to own and store it directly, without having to rely on intermediaries. So the first option would be to store BTC on a proprietary wallet, i.e. one whose seed or private keys are owned exclusively. 

The second option is to entrust the custody of BTC to trusted intermediaries. 

Bitcoin expert Jameson Lopp recently published a lengthy article on his Forbes page revealing the best BTC custody and storage strategies for those holding significant amounts of Bitcoin. 

Lopp, as a security expert himself, has helped many wealthy people protect their BTC and store it safely, so he is certainly a very interesting source of information in this field.

The first piece of advice he gives is not to leave BTC on centralized exchange wallets. He does not recommend the second option at all, that of relying on an intermediary, because anyone holding the private keys of a Bitcoin address can spend the BTC held on it at any time

Exchanges can be hacked, seized, or lose the BTC they hold and no longer be able to return them to their customers

These are not just theoretical threats, as this has happened several times in the past. 

how store Bitcoin
Self custody is among the best ways to store Bitcoin

Bitcoin self-custody as a safer system

Lopp recommends self-custody, and suggests devising a plan to make it as secure as possible. He urges not to take unnecessary risks, including trading and lending, as these are by no means risk-free activities. 

He also calls for consideration of all possible threats that one could realistically run into, not least because “Bitcoin investors are far more likely to lose their funds due to user error”. After all, moving funds to vault-based custody services that literally store private keys in underground bunkers also carries the risk of entrusting third parties with the custody of private keys. 

Lopp also suggests making the custody process simple, because complexity is actually the enemy of security. In this regard he states:

“It can provide a false sense of security (while only providing obscurity) while increasing the fragility for performing procedures required to regain access or transfer ownership”.

The issue of Bitcoin custody is unfortunately underestimated. This is because it is often entrusted to intermediaries who one hopes are trustworthy, but who are not always so. 

Self-custody also carries risks, but allows people to keep these risks under control without having to simply hope that they are. 

Given the technical difficulty of these processes, it is often best to get help from an expert to learn the best procedures to follow. Always bearing in mind that self-custody, which excludes the communication of one’s private keys to others, is still the absolute best thing to do. 

 

Marco Cavicchioli

Born in 1975, Marco has been the first to talk about Bitcoin on YouTube in Italy. He founded ilBitcoin.news and the Facebook group" Bitcoin Italia (open and without scam) ".

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