Hardware Wallet Bitbox02 - Secure Bitcoin Storage

After buying Bitcoin, dealing with storage is the most important issue.

Which wallet is most suitable depends very much on how and for what it is used and what amounts are involved. Today, a hardware wallet is the best way for the vast majority of users to store Bitcoin securely.

Bitcoin is owned through the knowledge of a private key. This gives you access to the Bitcoin of a corresponding address. So you need a way to keep these keys safe, unless you want to leave your Bitcoin on an exchange. With this option, however, you run the risk that you don’t actually own the Bitcoin and you are therefore exposed to various risks. Thus, this type of storage is not recommended.

If you want to have control over your keys yourself, and that definitely makes sense, you use an app called “Wallet”. This generates the private keys and manages them. If you have this wallet on a device with Internet access, you are exposed to computer viruses or security breaches. For the coins in daily use, this makes perfect sense, but for larger amounts, you don’t want to take this risk.

You could now take care of a secure setup yourself, but it quickly becomes quite technical and time-consuming. There are wallet providers that offer the possibility of so-called cold storages, where the part of the wallet with the private keys is located on an offline computer (e.g. Electrum, Specter, Sparrow). The setup is two-part and consists of a Watch-Only Wallet (online) and a Cold Storage (offline). A transaction happens as follows:

Transaction…

1.) …Generate with the Watch-Only Wallet

2.) …transfer to cold storage (memory stick)

3.) … sign on Cold Storage (only Cold Storage knows the private keys)

4.) …transfer back to the Watch-Only Wallet.

5.) … transmit to the network in the Watch-Only Wallet.

This is too technical for most users and definitely more inconvenient for everyone than a hardware wallet.