If you’re looking to store less than $1,000
A mobile wallet (an app on your phone). I strongly discourage storing bitcoin on an exchange, since exchanges are frequently hacked and governments may eventually confiscate bitcoin on exchanges. Coinbase, for example, has more than $10 billion in bitcoin…which has a USD value of more than the gold reserves of Belgium.
Also — anyone with your password to your Coinbase account can steal all your money in that account. An actual bank robber would be lucky to get $5k from your local bank. You should read how easy it is to steal $8k from a Coinbase account. I only use exchanges for buying and selling.
Mobile wallets: I recommend the Bitcoin.com Mobile Wallet for storing Bitcoin and Bitcoin Cash, or the Jaxx mobile wallet for storing multiple other cryptocurrencies (almost everything except Monero).
If you’re looking to store between $1,000 and $10,000
I like BitGo.
They use multisignature technology — you need 2 of 3 private keys to spend your bitcoin — and they only have 1. So, they can’t freeze or confiscate your money. It’s a little complicated but they walk you through the process. You’ll find it’s never too technically demanding when it’s your money at stake.
These are for sale through the above websites, or can be found on Amazon. About $100.
The US government stored the bitcoin they confiscated from the Silk Road — millions of dollars — on a trezor before they auctioned it off.
Remember the above-mentioned USD dollar values can change a lot when you are storing bitcoin. It’s better to be over-prepared than to think “oh shit that $300 I had on Jaxx is now worth $17,000, but that was 2 phones ago and I have no idea how to access it anymore.” People have done this with millions of dollars because it wasn’t worth that much when they started. Don’t be that guy >:|
Make sure you back up your wallets. Bitcoin wallets are secured by a private key, similar to the way your email is secured by your password. The difference is your private key is just a number. It’s a random number somewhere between 0 and about the number of atoms in the universe, so it’s computationally infeasible to guess. But if anyone knows your private key, they can instantly steal your bitcoin and you have no recourse, no bank you can call, nothing to get it back.
Most wallets (mobile wallets, hardware wallets) allow you to back them up with a 12 or 24-word “seed.” This seed is just a human readable version of your private key, encoded as 12 or 24 short english words. It’s important to write this on a piece of paper (not on a computer or any internet connected device) and keep it somewhere safe (safety deposit box, actual safe, encrypted, buried, laser etched in steel at GPS coordinates only you know…etc, to taste). If you have $100,000 in a wallet, then your private key is a $100,000 bill. Except, anyone with a picture of it can steal it immediately and irrevocably.
If you don’t back up your wallet, then you could lose it and experience the same irreversible monetary loss (your phone dies, your trezor goes through the washing machine, someone steals it). As long as you have your backup, you’re fine. So maybe also…don’t keep your hardware wallet and its backup in the same place! Your insurance company will not cover your million dollar bitcoin house fire.
For anyone looking to get into cryptocurrency now, this article by Ben Yu (long, maybe 30 min read) is required reading: Cryptocurrency 101
Enjoy, and let me know any other questions in the comments.
At the time of this post, 1 Bitcoin traded for $10,930.08 on Coinbase and 1 Bitcoin Cash traded for $1,420.00 on Kraken.
Haven’t bought bitcoin yet? Use my referral link to sign up with Coinbase, and we’ll both get $10 in bitcoin when you purchase $100.