Why security paranoia is rational with Bitcoin and crypto
The more time I spend talking to people in the crypto space, the more I realized how important security (and a security mindset) are. It’s not paranoia — it’s actually incredibly thoughtful and rational.
A few examples of simple paranoia
- You can’t trust your money on your laptop — it has almost certainly been hacked
- You can’t trust your money in an exchange (bitfinex and Mt Gox were both hacked) and exchanges are not insured up to infinity — neither are banks
- You can’t trust wallets (also subject to hacks)
- You can’t put your money in a multi-sig wallet. Parity was hacked again
- A friend printed out a QR code for some of his ETH or BTC. Now he constantly looks for security cameras and camera phones before turning over the piece of paper with the QR codes because he worries a camera could steal all his currency
So — A hardware wallet is the logical choice
- You can buy one on amazon — but do you know for sure that the seller hasn’t already copied down the backup code and will steal your money?
- You can buy one from the manufacturer. Probably safer, unless an employee grabbed the code?
So — obviously the right answer is to print out your private key and store it.
- That can get stolen if you leave it in your house
- I could get mugged if I keep it with me, so maybe I need to encrypt it first. But then I could forget the encryption methodology.
- It can get destroyed in an earthquake, so now I need to store copies in multiple geographies
By the time I’m done, I need to print out my private key, modify it in a way only I know. Print out the new key. Cut it in half. Store the two halves in two locations. Keep copies in other geographies.
Perfect — I am now totally secure, until I get killed in a car accident and my kids lose all access to my crypto. $500 totally wasted — never to be accessible again.
Suggestions or thoughts are welcome