Now That I Own Bitcoin, I Can’t Sleep at Night. Here’s Why
Here’s what you need to know before you buy in, too
A couple months ago, I bought a tiny fraction of a bitcoin. One hundredth of a coin, to be exact.
How much harm can a simple little investment cause, really?
As it turns out, a lot. At least to my nerves. Because now that I own my slice of the digital pie, I’m scared someone is going to come steal it from me and eat it.
Here’s what I’ve learned thanks to HODLing a tiny piece of bitcoin — and what you need to know before you buy in yourself.
Never trust an exchange
As I explained last week, I bought my hundredth of a bitcoin on Coinbase, a largely reputable exchange. They keep cryptocurrency in cold storage — that is, stored offline where hackers (supposedly) can’t get to it.
Before I bought, I liked the idea of keeping my bitcoin there. But then came the hacks.
First, it was Coincheck. In January, I learned that the Japan-based cryptocurrency lost $530 million to a hacker because, as it turned out, only some of their coins were in cold storage. Then last week, I found out that hackers stole $170 million from another exchange, Bitgrail, who again, had coins improperly exposed.
Given the shocking frequency of these problems, how could anyone sleep with their money sitting in an exchange? I needed to do something. Fast.
So where should I keep my bitcoin, anyway?
After a couple nights of tossing and turning, I realized that the only way I’ll ever rest easy is if I physically own my bitcoin myself. The only question was … how the heck do I do that, safely?
I did a lot of reading on Reddit and Medium, and it sounds like most bitcoin ballers keep their coins in a specialized hardware wallet, such as the Ledger Nano. It looks really cool. But at $100 each, they cost about the value of the bitcoin I have ($105), so they’re not a viable option.
There are wallet apps for my PC, Mac and Android phone, too. But my devices are always connected to the internet. And I want to keep my bitcoin as far from the internet as I can.
So I decided to keep my bitcoin in a paper wallet. Because you can’t get more offline than a physical piece of paper.
Here’s how you make digital currency into physical currency
The process of creating a paper wallet is pretty easy. I used bitaddress.org to create mine. I saved a version of the site to my computer, disconnected my computer from the internet, and then opened the html file I saved.
After moving my mouse around the html page to generate random numbers, I was able to print off my first paper bitcoin wallet. I chose to create a password-protected version.
Here’s what a paper wallet looks like (with the sensitive bits hidden, of course):
I loaded my paper wallet with bitcoin via Coinbase, sending my crypto to the address printed on the “Load & Verify” side of the wallet. I’ll keep my money stored in the paper wallet until I’m ready to spend it.
When it comes time to buy my Lambo, I’ll download a wallet app. I’ll transfer my bitcoin to that, and then use the app to send my bitcoin to the dealership. Or I could use the app to send my bitcoin to a new paper wallet to give to the dealership, loaded with exactly the amount I need. That new paper wallet can be redeemed like a check.
Come at me, hackers, you (probably) can’t get this coin
Now that I have a paper wallet, I’m keeping my bitcoin locked up in a safe. I took this weird, digital money and I made it into a real thing. And that makes me feel better about owning bitcoin.
Admittedly, someone could still steal my stash of coin. A catburglar could pull an Oceans Eleven-type caper, break into my apartment, and steal my safe. Still, I feel good enough now about my bitcoin’s security that I can at least get to sleep without chugging a bottle of Nyquil.
Besides, I don’t plan at stopping at just 0.01 BTC. I’ve got big bitcoin dreams. And now that my stash is secure, it’s time to go about growing it in the most cost-effective way possible.
That means — yup — it’s time to start mining for crypto. Stay tuned, my friends. It gets a lot more lucrative from here.