There are many so-called ‘crypto wallets’ today. Some are custodial, some are non-custodial. Some support so-called ‘altcoins’, while others only support Bitcoin. Today we will discuss making your own cold-storage Bitcoin wallet using a software wallet called Electrum.
In the beginning of the cryptocurrency era, there were not as many crypto wallets on the market; as there were not as many ‘cryptocurrencies’ as there are today. However, now there are countless companies claiming that their products will revolutionize the finance industry. Lets be realistic; not everyone in the crypto space will emerge a winner. This is a saturated market, and there is massive level of worthless products being pitched to consumers. Essentially every cryptocurrency besides Bitcoin is a scam. See our other article: Is Bitcoin the only real cryptocurrency?
Custodial vs. Non-Custodial
Considering that Bitcoin is the only cryptocurrency that we want exposure to, our options become much more refined. There is very few wallets that strictly support Bitcoin. There are popular wallets such as Exodus that are secure in nature & allow you to use Bitcoin, however, their wallets run on their own servers. This means that your Exodus wallet, for example, could become non-functional if the company were to have an issue with their servers. So while non-custodial wallets like Exodus are better than their custodial counterparts, they are not bulletproof. For maximum security, you want cold-storage, which is a wallet whose keys are stored away from any internet connection.
Cold Storage
There are two ways you can setup a cold-storage wallet. The first & more simple way is to buy a cold-storage wallet such as Trezor. While this is a secure & convenient option for many people, we like to use our own devices.
Electrum
The most secure way to turn your own device into a cold-storage Bitcoin wallet is to use Electrum. Electrum is a software wallet that provides cold-storage functionality as well as the features of a hot-wallet, if you so choose to use them.
While we could install Electrum on nearly any device, we want to use a device that is never exposed to an insecure internet connection. Therefore the best option is to use a spare device that we don’t use to connect to the internet.
While you could erase everything on your phone or laptop & use those devices, we are going to focus on using a thumb drive. The Electrum wallet functionality does not take up much space, so it’s a waste of resources to use a fancy phone or laptop just for a Bitcoin wallet. Also, if you connect to the internet on that device & your connection is compromised, you could lose all your Bitcoin. So while Electrum wallet is as secure as they get, it is only as secure as the platform it is installed on. It’s imperative that the device you use for cold-storage is not the same device you use regularly to connect to the internet.
If you choose to use a spare Android phone, you can simply install Electrum wallet. However if you have a spare laptop, you should not install Electrum on Windows. Windows is a very insecure operating system & is targeted by hackers everywhere. If you are using a laptop or thumb drive, you want to use a secure operating system.
TailsOS
TailsOS is the most security-oriented operating system on the market. Edward Snowden famously used it to leak classified NSA documents without revealing sensitive information about himself. Tails only connects to the internet through Tor, which means that every internet connection is secure. Tor is illegal in some countries, however, which means that in some countries the next step may be illegal. Proceed to the next step with caution if you are living in China or Turkiye.
TailsOS can be installed on a thumb drive, which is the most efficient & secure option. Installing TailsOS onto a thumb drive is essentially the same as turning a thumb-drive into a cold-storage wallet, since it includes all the necessary Bitcoin functionalities.
In order to install Tails onto a thumb drive, you need to use Balena Etcher. After you download the TailsOS file, download Balena Etcher from their website & open the program. If you have a thumb-drive you should be able to follow their directions and flash the operating system onto the thumb-drive without much difficulty.
Once you’ve flashed TailsOS onto the thumb-drive, you are ready to create your new cold-storage wallet. All you need to do is turn your computer off, insert your thumb-drive with TailsOS, and boot from the thumb-drive. If you don’t know what I’m talking about, search ‘how to boot from thumb-drive’ combined with the brand of computer you’re using (Dell for example).
Once you figure out how to boot from your thumb-drive with TailsOS, you have the most secure & convenient Bitcoin functionality that you could possibly have. Just don’t forget your seed phrase, and don’t log into your new wallet from any other device.
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