Bitcoin Fortified: Simplifying Cold Storage for Bitcoin - #237
TL;DR - From Ledger's cautionary tale to crafting your own digital stronghold - embrace simplicity with this guide to DIY Bitcoin cold storage security.
Dear reader,
In my last essay, I shared concerns about how the educational burden has fallen absurdly on KYC exchanges. Naturally, those who come into the space via the KYC exchange may find themselves with a sense of loyalty to their leaders.
Hardware wallet markets fall into the same camp.
Noble as some hardware wallet makers might be; there is a conflict of interest.
From how you obtain a hardware device to updating firmware which has compromising policies; hardware wallets as a solution to cold storage is a ticking-time bomb.
Hardware Wallets: A Double-Edged Sword
Hardware wallets, akin to the trusted companions of a seasoned adventurer, are devices designed to safeguard your Bitcoin from the lurking dangers of the digital realm. Yet, even the sturdiest swords can bear the mark of compromise.
The Advantages
The allure of hardware wallets lies in their tangible nature, divorced from the ephemeral world of online threats. Holding one in your hand, you feel a sense of control, a tangible fortress for your digital wealth.
The Disadvantage
However, as with any powerful tool, there lies a vulnerability. Ordering these guardians online reveals your identity, making you susceptible to the prying eyes of the internet. Purchasing them in-store, though offering a degree of anonymity, still raises eyebrows. A specific device in your possession becomes a beacon, a target for those who seek to exploit vulnerabilities.
The Unsettling Reality of Device Makers
Hardware wallet makers, despite noble intentions, operate within the confines of a market. Their goal, albeit essential for their survival, creates a conflict of interest. Recent real-life cases involving Ledger and Trezor wallets being compromised serve as stark reminders of the fragility of our digital fortresses.
Ledger's Cautionary Tale
Ledger's data breach in July 2020 exposed customer details, albeit reassuringly claiming the safety of payment information and crypto funds. Yet, it unveils the harsh reality that even the most trusted names can falter.
Trezor's Privacy Struggle
Trezor's partnership with Wasabi Wallet aimed at enhancing privacy inadvertently led to vulnerabilities. Chainalysis traced transactions due to Wasabi Wallet's failure to fully implement the ZeroLink protocol. Financial privacy, it seems, is under siege.
Liberty Safes: A Cautionary Tale
A comparable example would be how Liberty Gun Safes, thought to be one of the best gun safe makers on the market, handed the keys to authorities. Many thought their assets were securely locked away, but the manufacture kept a data base on all safes sold to customers.
We’d like to think the hardware wallet makers would be a little different, to operate in a more cypherpunk manner to allow users to preserve their wealth privately. Sadly, this is not the case.
As the Bitcoin ETF approvals loom closer, more regulatory pressure — at home and abroad — will continue to grow. Hardware wallet makers make for easy targets.
A DIY Fortification: Simple Cold Storage at Home
In my pursuit of simplicity, I present to you a simple path – a do-it-yourself cold storage solution. This involves two devices: one offline, one online, acting as the yin and yang of your digital wealth.
Offline Device: Make sure device is offline (and in airplane mode). Choose and sideload a secure wallet (e.g., Bitcoin Core, Sparrow, or Samourai Wallet). Create private keys, write them down and ensure control remains firmly in your grasp.
Online Device: Install a separate wallet (e.g., Blue Wallet or Samourai Wallet’s Sentinel) as a watch-only wallet. This adds an extra layer of security without exposing your private keys.
Test the Waters: Send a small amount of Bitcoin to the offline wallet and check the watch-only wallet for confirmation (ideally 6 confirmations). This practical step ensures the reliability of your setup.
Secure the Fort: Once the offline wallet is operational, secure your private key and then wipe the device clean.
In this DIY endeavor, you reclaim control and eliminate the risk associated with external entities.
The Key Takeaway
Unless you are installing the software yourself, there is no way to tell what is and what is not being shared or leaked. Whether by intent or by accident; using a hardware wallet reintroduces trust into the equation.
Conclusion
In a world where trust is both a currency and a vulnerability, simplicity becomes the ultimate safeguard.
By taking charge of your Bitcoin's security through a straightforward cold storage setup, you not only fortify your digital wealth but also regain the reins of control in this ever-expanding realm of uncertainty.
Until next time,
Rare Passenger
Block Height: 816 673
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