Bitcoin: Be Your Own Bank
The best part about bitcoin is that you don’t need a bank to store your money.
With only a laptop/computer and USB stick (or CD), you can safely store bitcoin on your own, and trust that no one but yourself can spend/send them.
Preview of the Process
Step 1: Do you have a PC or a Mac? If so, your operating system (abbreviated “OS”) was made by Microsoft or Apple. There is a third OS called Linux, which is a free operating system that we are going to download and install onto the USB/CD.
Step 2: Afterwards, you will turn off and turn on your computer. Except instead of running windows/mac, you’ll start up your computer with the Linux OS we installed onto the USB/CD.
Step 3: While on the Linux, you will safely download a bitcoin wallet application. The first time you start the bitcoin wallet application, it will create a string of 12 random numbers.
Step 4: You will take these 12 random words (called the “seed”), and write the seed onto a piece of paper.
Thus at any point in the future, you can easily recover any bitcoin you had saved, by simply typing in the 12 random word seed.
Now let’s get started with the first step
Step 1: Download and Install Linux
Linux is the umbrella term used to describe a variety of free operating systems with similar code structures underneath. In this tutorial, I’ll be using (Linux) Ubuntu 14.04 LTS because I believe it is the most user friendly. If your more experienced, Tails is worth mentioning. This tutorial uses the process for a USB stick, although a CD is similar.
Download Linux
The first step is to download Ubuntu desktop.
Google search: “Ubuntu desktop download”
I recommend you use a google search to find the most recent Ubuntu download.
Not recommended: here is a download to Ubuntu (Linux) 14.04 LTS. It is the most recent version as of 06/05/2014.
Great! Now you have Ubuntu downloaded onto your computer, it should be named:
Install Linux onto the USB stick
The process of installing Linux onto a USB/CD is known as making a “LiveOS”. A LiveOS is a small operating system installed onto a USB/CD that any computer can boot up on (instead of PC/Mac). This makes it easy to try out Linux and see what it’s like without actually installing it onto your computer and taking up space. This is great for Bitcoin management because it’s almost like using a brand new computer to more* safely type in sensitive information that you don’t want hackers and malware to discover.
Luckily, awesome developers around the world have made tools for installing a LiveOS for you. Thus you don’t have to know or do any coding in order to install Ubuntu onto your USB.
I’d recommend you google search:
“LiveUSB Builder” + whatever your operating system is (PC or Mac)
I recommend you find the software that works best with your computer and most up to date by using this google search (or a variation).
Not recommended: if you cannot find anything; here is LiLi: a PC LiveUSB builder, here is Linux USB Creator: a Mac LiveUSB builder
That’s it! Now your USB should be able to boot your computer into Ubuntu!
Step 2: Boot up Computer running Ubuntu (Linux) LiveOS
Now we are going to start up the computer and run Ubuntu off of the USB stick. There are some small tricks to do this from your PC or Mac
Boot Up LiveUSB on Windows
When rebooting your computer, hold onto either F8, F12, or the Escape button.
The video and picture describe this simple trick.
Boot Up LiveUSB on Mac
When rebooting your Mac, simply hold onto the “option” key and it should bring you to your boot options.
On the far right should be a disk labeled “EFI Boot”, select that
You should shortly begin booting into Ubuntu! Congratulations!
Step 3: Install a Bitcoin Wallet application
You might get this screen when loggining into Ubuntu, simply select “Try Ubuntu”
Great your in! The desktop should look like this.
Note: the next step requires internet connection. Ignore if your on a desktop, yet if your on a laptop, you likely won’t be able to use your WiFi, yet if you use an ethernet cable with your router, your internet will work without a hitch!
Perfect! Now look along the left dock, you’ll see the Ubuntu Software Center, click it!
The dashboard of the software center should look like this
In the top right you’ll see a search bar, search “Electrum”
Great! Install Electrum and it will pop up in your dock!
Step 4: Copy the Seed
Electrum lets you generate an infinite amount of bitcoin addresses that can all be recovered from using a single 12-word pass phrase. This way you can give out a different address to a bunch of different people to avoid linking identity, yet still retrieve all the funds by simply entering in the passphrase.
When you open electrum, it will ask you these options
Be sure to click “Create a new Wallet”. Later on, you will be able to recover your wallet by selecting “Restore an existing wallet from its seed”.
There’s your seed! The 12 random words can used to recover all the bitcoin sent to addresses created by this seed. Thus, write down these 12 words on a piece of paper and keep it hidden. Do not write this on an electronic device (phone, tablet, other laptop) for peace-of-mind and security.
To find out more how the Electrum wallet works (such as how to receive and send money), Bitzuma did a great write up which describes it all quite clearly.
That’s it! With that piece of paper of 12 words you can safely shutdown the computer and try testing your cold storage.
Be sure to test this before sending large amounts of money! Send a small amount (less then a few cents) and then start from step 2 to recover this small amount.
Once you do that a few times, you should understand how it works and can safely store your bitcoin!
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