To secure your bitcoins, print them out

paperwalletpicture27 Feb 2014 / Marketwatch – “Opening a bitcoin account on an online exchange is like opening a brokerage account in Zimbabwe,” says Alex Daley, chief technology investment strategist for Casey Research, a global independent finance research company based in Stowe, Vt. Many investors on online exchanges—like the now-defunct Mt. Gox—took several months to pay up on trades, he says. “Mt. Gox is not the first site to suffer problems and certainly won’t be the last,” he says.

But even the biggest bitcoin fans recommend a real wallet or physical safe. “Printing off the private key from your bitcoin, putting it into a paper form and sticking it in your hip pocket or house wall safe is one way to make sure it’s safe,” says Andrew “Flip” Filipowski, chairman and CEO of SilkRoad Equity, a cloud-based human capital management software company. “Keep your bitcoin offline,” Daley adds. He too suggests keeping the bitcoin private key—a secret number that allows bitcoins to be spent—on a thumb drive and advises against keeping a copy online: “If a site is hacked and your bitcoin is stolen, the chance of recovery is effectively nil.”

Some companies are even offering offline “cold storage” services, which also keeps the secret key in a physical location like a safe. Elliptic, a bitcoin cold storage company based in London, has had a bump in interest since the disappearance of Mt. Gox. The company charges a 2% annual fee. “We keep them offline in a bank vault,” he says. “We’re giving people the same kind of protection they get in a bank account,” says Tom Robinson, who co-founded the company last October. Unlike a bank, Elliptic is not regulated by the financial services industry, but it’s insured against theft. “Building trust is our biggest challenge,” he says, “but we’re slowly doing that.”….. Read more

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