Best Places to Hide Your Cryptocurrency 101

First, let's be clear... Your crypto lives on the applicable blockchain. It does not reside inside your Ledger hard wallet. Nor is it sitting on the exchange where you purchased your coins.  All crypto resides on the blockchain. Got it!  

So what is there to protect?  Why, the private key of course! The private key allows you access to your crypto on the blockchain - where you can send it to another receiving address, or exchange it for another currency, or just look at it and marvel at your genius investment. When you purchase crypto on an exchange, a private key is provided courtesy of the exchange (i.e. Coinbase, Kraken, Binance, etc). 

For safe-keeping, you want to OWN your private key and store it in a hard wallet (i.e. Ledger, Trezor, etc.).  Hard wallets produce a public key which is created from the private key through a complex mathematical algorithm. This allows you to send and receive cryptocurrency. Each hard wallet comes with a  recovery seed phrase. Stay with me... The recovery seed phrase consists of 12 - 24 words which are actually more important than the hard wallet.  What! Yes, because you can lose your hard wallet, but as long as you have the recovery seed phrase, you can program a new hard wallet and regain access to your private key!!!

Photo by <a href="https://unsplash.com/@macroman?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText">Immo Wegmann</a> on <a href="https://unsplash.com/s/photos/safe?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText">Unsplash</a>

So when we say "Best Places to Hide your Cryptocurrency" what we really mean is "Best Practices for Protecting the Recovery Seed Phrase".  Each hard wallet comes with a small piece of paper for you to write down the phrase when you setup the wallet. But do you really want to trust your investments to the perishable nature of paper?

Photo by Immo Wegmann on Unsplash  

Best Practices for Protecting the Recovery Seed Phrase

DO'S

1) Buy a cold wallet, preferably Black Seed Ink, but we are not bias. Make sure it is a stainless steel 304 grade or titanium. Use the device to duplicate your seed phrase and protect it against fire and water damage.

2) Store your cold wallet in a safe place and let a trusted source (i.e. sealed Will and Testament) know where to locate it in the case of your unexpected departure from the living. 

  • Secret Book Safe
  • Home Safe
  • Mount Plates Under Desk, Dresser, Nightstand, Pool Table, etc.
  • Make Two Copies ! (Ask mom to store a plate in her home safe)
  • Double protection - Pelican or Nano waterproof case and a home fireproof safe will help protect your hard wallet from fire and water damage.
  • Do hide your cold wallet, but don't make it impossible to locate if your surviving relatives need access to your investment. 

Advanced Method

Ledger hard wallets now have an optional passphrase which is essentially a password added to your 24-word recovery seed phrase.  You need both to program a new device. Steel the recovery phrase and the password phrase on two separate cold wallets.  Keep these steel plates in two SEPARATE LOCATIONS.

DON'T

1) Do not store the hard wallet or recovery seed phrase in a safety deposit box! The IRS considers these bank devices an asset and can seize with a court order.

2) Do not take a picture of your recovery seed phrase!

3) Do not copy your seed phrase in front of your home security cam mounted behind your desk. Yes, that one!

4) Do not store your hard wallet and cold wallet in the same place unless you like giving gifts to thieves.

5) Do not buy one of those cold wallets that can be worn around your neck! This is the last thing you should be doing with your cold wallet. SMH

6) Do not purchase cold wallets from companies who provide free etching if you send them your passphrase. Yes, this is actually a thing.

In Crypto We Trust!

Best Places to Hide Your Cryptocurrency 101