Whether to buy it Cryptocurrency Since long-term holding may be the biggest decision that investors interested in digital assets must make, but where can cryptocurrencies be stored. Bitcoin It can be the most result.

Social media posts began to emerge after wildfires in California earlier this year claiming Bitcoin loss, some users showed burning and illegible metal plates designed to protect seed phrases, or described the complexity of restoring cryptocurrency keys stored in secure storage boxes in banks that were affected by fire in banks. While it is impossible to verify personal claims about consuming hard drives, laptops and other storage devices that contain so-called hard storage crypto wallets and seed phrases, it is certain that Bitcoin’s self-perception lists a unique set of security issues. These risks are growing.

Holders of cryptocurrencies often use some form of “wallet” and have some major characteristics – whether the wallet is connected to the internet and how much control is embedded directly into the wallet of trade and transfer. Another basic question is whether cryptocurrency investors use third parties to fully guardianship, or maintain full custody and transaction control over their shares.

Standard third-party platform “hot wallet” – Think about it Common cases or BlockChain.com – Continuously connect to the Internet. refrigeration On the other hand, a “cold wallet” includes hardware devices with offline private keys (such as USB sticks) and even seed phrases (main recovery code, collection of 12 to 24 words for restoring cryptocurrency wallets). When connected to the Internet through another device, you can access the cryptocurrency using a hardware wallet or an offline backup of the seed phrase.

With third-party monitoring options, there is Steps to help owners stay alert Oppose the threat posed by cybercriminals, who have access to the platform connected to the Internet, including the use of two-factor authentication and strong passwords. The U.S. Marshal service within the Justice Department, responsible for seizing assets from U.S. law enforcement, uses Coinbase Prime to provide custody of the digital assets it seizes.

Many crypto bulls prefer self-customized digital assets like Bitcoin for some of the same reasons they are interested in cryptocurrencies: a lack of confidence in some forms of institutional control. The custodial wallet trading convenience of cryptocurrency brokers, such as the risk of exchange hacks, shutdowns or fraud, such as the high-profile implosion of FTX. Wildfires are just one example of a recent series of global events that have raised more questions about the shift in the cryptocurrency custody debate. There is an ongoing conflict in the Middle East and Russia-Ukraine war, which has led Crypto Bulls from Overseas to Rethink Their Method Self-casustody.

Nick Neuman, co-founder and CEO of Selfcustody Company Casa, said that physical risks in the world are an opportunity to revisit Bitcoin security like natural disasters, while ordinary security opportunities fold the practices of most people together. “Most people fix Bitcoin with a private key. If that key is written on a single device or as a seed phrase, it is a single point of failure. If you lose that key, your Bitcoin is gone.”

It’s obvious that retaining seed phrases on paper can provide the lowest level of protection against fire, but it’s common practice, Norman said. Sliding these papers into a fire bag or safe provides some protection, but not much, and even takes the extra step to place seed phrases on a “indestructible” metal storage board at several fault points. First, they may not be so indestructible, and second, they may not be found in rubble.

“Logically, given the location of the fire in California and the story shared on X, it’s likely that Bitcoin is lost,” Neumann said. “Some of it is very convincing.”

CASA performs every year Stress test for seed phrase backup.

Some self-customer services (such as CASA) offer multi-signature settings that reduce the risk of single point failure. Multi-key encryption “Vault” can include cell phone keys, multiple hardware keys, and recovery keys that the company likes Casa on behalf of the owner.

The multi-person custody method allows the owner to hold most of the keys, while the trusted partner holds a few keys. In such a setup, the owner will need to lose copies of all physical devices and all seed phrases at the same time, said John Haar, managing director of Swan Bitcoin. As long as the owner has access to at least one device or a seed phrase, they can recover their Bitcoin. Hal said this approach should significantly limit the potential of all equipment to be lost in events such as natural disasters.

“You can spread these keys to multiple regions or even countries, and you need any three of the five keys to approve Bitcoin transactions,” Neumann said of CASA’s five-key approach.

Jordan Baltazor, chief executive officer of the regulated cryptocurrency custodian Fortress Trust, said the best practices we use in other areas of our personal lives should apply to cryptocurrencies. First, diversify storage methods and trade-offs. He said digital assets are also different when backing up personal and sensitive data on the cloud to ensure data resists loss or corruption.

Companies including Coinbase and Jack Dorsey Blockage Provides products that attempt to merge some of these ideas, creating a more secure version of crypto wallet for ease of use. There is Coinbase Vault, which includes enhanced security steps, and users can then access Crypto Holtings to trade. There are also Coinbase Wallet and Block’s Bitkey, whose mobile apps are available like traditional wallets, making it easy to move Bitcoin, but able to pair with hardware wallets and add more common security.

Bitkey hardware requires multiple authorizations for transactions that increase security, similar to “Duo Smart Wallet”. Bitkey also provides Recovery Tools So one of the biggest risks of self-casustody-the code or phrase required to restore a cold wallet-is no longer a problem.

Solutions like Dorsey’s may help solve the tension between convenience and security; they at least emphasize that tension exists and may be a barrier to the adoption of a wider cryptocurrency. In addition to the risks that emerge in the form of wildfires, various natural disasters and wars, Bitcoin self-observation may be vulnerable to the greatest personal risk: the accidental death of a Bitcoin owner. It can be said that when unlocking a cryptocurrency chain, nothing is more complicated than inheritance.

Coinbase requires probate court documents and specific intention designation before releasing funds custodywhile physical wallets have little support, it is possible to stick all digital value to the private key. Bitkey launches Its inheritance solution In February, a Bitkey executive called it “a bit of a multibillion dollar problem waiting to happen.”

“People who make a big investment in Bitcoin definitely need to think differently about how to protect it,” Neumann said. He said that after a disaster like the California wildfire, or when communication goes bankrupt like FTX, the industry does see more cryptocurrency holders taking action to move to a safer storage setup, he said. “I want to wait until ‘bad things happen’ to happen to stimulate actions to improve one’s personal situation is human nature,” he said. “But I think if people are more proactive.