Words by Danny Scott
Last week, Gold Bug Peter Schiff was back to attacking Bitcoin in any way he possibly could. This time he blamed the software for “forgetting his password” which meant that he lost access to his Bitcoin.
First off, it’s important to say that consumers shouldn’t be panicked or worried about Bitcoin after reading about his experience — Peter has purely made these statements as it fits his agenda for people to own Gold and not Bitcoin.
The truth of Peter’s situation was that he had a private Bitcoin wallet (to store his Bitcoin) which he looked after himself and had forgotten the password to.
What his situation left us with was actually a good opportunity to learn from his mistakes by educating people on storing Bitcoin properly.
How to store Bitcoin
When people buy Bitcoin, they need to store it somewhere. There are many different ways of storing it, but some of these can feel complicated for newcomers to the industry.
To avoid the hassle of learning and understanding how to store Bitcoin themselves, people might want to use a trusted third-party instead. For example, CoinCorner’s customers can buy and hold (store) Bitcoin directly in their account. Although others in the industry will advise against this, I feel it’s important to acknowledge that storing Bitcoin is not always straightforward for those who are new to it and in the beginning, it can be helpful to use simpler storage options.
For those with more confidence in storing their Bitcoin offline (e.g. not on an exchange), it’s easy to avoid a Peter Schiff-style incident by recording the password and making backups of the wallet/password (depending on how it’s being stored).
Factors affecting where to store Bitcoin
Deciding where to store Bitcoin is also influenced by the value that’s being held. For example, £50 worth of Bitcoin could easily be stored/accessed on a Bitcoin exchange with fairly low risk due to the value.
Large amounts like £5,000 would be better stored on what’s known as a “hardware device”, whereas it would be ideal to store huge sums like £50,000 with an insured third-party (or even in a secure vault).
There are many storage options out there and people should take a common sense approach in figuring out the best choice for them. I personally believe that in Peter’s case, he hasn’t forgotten his password and has simply made this statement up to support his attempts to taint Bitcoin’s reputation.