FREQUENTLY ASKED QUESTIONS (FAQ)

These are some of the frequently asked questions regarding the information on this site.

Why should I use cold storage for my bitcoins if an ecnrypted wallet can't be cracked?

Because hacking and cracking are not the only potential risks for your bitcoins. If you only keep your wallet in your computer's hard drive, and something happens to the hard drive -gets stolen or damaged- the bitcoins are lost pernanently. So even if a thief can't access your wallet after stealing your computer, or after the hard drive gets damaged, if you don't have a secure backup, neither can you.

Why use cold storage if Coinbase and Blockchain.info are very secure?

While Coinbase and Blockchain.info are indeed very secure, they are not indestructible and they can lock you out. In late March, 2014, for example, Blockchain.info found a bug in its database that forced the site to go offline for 2 days. Nobody could access the site. And on Coinbase, if you enter your password wrong too many times, or if you log in and out too many times, Coinbase will lock you out of your account for 24 hours. What if you need your bitcoins in a hurry? Thus, the safest bet is to securely store them yourself.

UPDATE: A reader correctly mentions that it was possible to access the coins stored in Blockchain.info by using the JSON wallet backup Blockchain emails you when you update the wallet and then import it into the Multibit wallet.  The original version of this answer stated that nobody could access their bitcoins for 2 days. However, for this to work, your settings in Blockchain.info must indeed be set for sending backups to your 2-step authenticated email address on a regular basis.

How many bitcoins should I have before saving my wallet in cold storage?

It is recommended that you always backup your wallet no matter how many bitcoins you may have. As per removing them from a hot wallet and transfer them to a cold storage wallet, you should do it when you reach an amount that would distress you if you lose it. It could be 50 dollars worth of bitcoin, or 100 dollars worth of bitcoin. If losing whatever amount of bitcoins you may have in your hot wallet will cause you distress, then you should put most of it in encrypted cold storage. An easy suggestion, though, should be to send the bitcoins to cold storage when you reach 100 dollars.

What is a "hot wallet"?

A hot wallet is a wallet stored in a computer that's connected to the internet. It may even be a computer that's not connected to the internet, but that can be operated. The term "hot" refers to the fact that electricity is running through the computer, heating it up. "Cold" refers to storage that does not have electricity running through it, such as an unplugged drive or a paper wallet.

What if I forgot my passphrase?

Then your bitcoins are permanently lost, as encrypted wallets with a strong password can't be cracked. That's why you should always write down and backup your passwords and store them in a safe location.

What if somenthing happens to me and I want my family to have access to my bitcoins?

Then teach a family member to decrypt your wallet. Or write down the instructions and tell them where to look for them. You can also leave instructions on how to access the bitcoins in a will.

What if my house burns down and my wallet was inside?

Some people have their encrypted paper wallets in a metal plate that's fire resistant (Google it for merchans who engrave encrypted addresses in metal). You can also keep a laminated copy of the encrypted wallet in your actual wallet and take it with you in case of an emergency. And for the ultimate protection, memorize the full alphanumeric private key. Problem is, if you lose your memory, the bitcoins are lost.

Wait, isn't it risky to give my encrypted paper wallet private key to a merchant for a metal wallet?

Not really. It would take the merchant literally millions of years to crack it if you use a strong passphrase.

What about Litecoin and Dogecoin? How come those are not mentioned in this site?

The procedure for encrypting and securing Litecoin, Dogecoin, or any other altcoin is pretty much the same as the procedure for bitcoin. You just need the appropriate wallet software for each altcoin, or for creating paper wallets for each altcoin. We focus on bitcoin in this site because it is the most used digital currency. Keep in mind that all altcoins are basically bitcoin clones, so the procedures for encrypting them are similar.

Should I use Coinbase or Blockchain.info for secure online storage?

Both of them have strong security. The only real difference is Coinbase lets you buy and sell bitcoin directly and pays for your miner's fees, while Blockchain.info does not. Even so, it is recommended that you only keep a limited amount of bitcoins in an online wallet and the rest in cold storage. To open a Coinbase account use this link: http://bit.ly/1drZnT5

How come banks always issue warnings that bitcoins can be hacked?

Because banks have agendas and they don't like the idea of a decentralized currency without borders -such as bitcoin- that renders many banking fees unnecessary. Hacking is a real risk to your bitcoin wallet if you do not take appropriate measures to encrypt and secure it, but the banks use the idea for fear mongering. This site is a direct response to those warnings. We want to show the world that you can secure your bitcoins and keep them safe from hackers if you take the appropriate steps towards that goal.

Other than using my password, is there another way my bitcoins could be stolen from an online wallet?

Yes. A con artist actually got into the servers for Canadian Bitcoins, a Canadian bitcoin exchange, simply by calling the exchange's ISP and requesting access. The ISP did not request identification and did not follow security procedure. As a result, $100,000.00 worth in bitcoins were stolen. You can read all about it here.

I still think these security measures are cumbersome. My mother probably won't be able to follow them.

Then help your mom understand them. True; right now bitcoin is still relatively in its infancy, so the bitcoin software still has a long way to go towars making it 100% user friendly. That is why we made the tutorials in this site as simple and straight forward as possible. We hope in the future the Bitcoin Core wallet program will have an easy to use import feature for encrypted paper wallets, for example. Until then, this site is our contribution towards a more secure bitcoin ecosystem.

My computer crashed and I had bitcoins in it. Is there a way to recover them so I can put them in cold storage?

Maybe. It depends on what caused the crash. If the computer crashed because the hard drive itself was damaged (liquid got into it, for example) then the chances of recovering the data a slim. But if the computer crashed because of a processor/motherboard problem, then it is possible to retrieve the information in the drive and thus the bitcoins.

To retrieve the data from an internal hard drive, get a transfer kit such as this one. Unmount the hard drive from the computer and use the transfer kit to plug it into a new computer (windows to windows, Mac to Mac, Linux to Linux, etc.) The hard drive will be read as an external hard drive. Look for the wallet file and then transfer it to the new computer and to a thumb drive for backup.

Install the wallet program and use the old wallet file to retrieve the bitcoins.



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