How can I hold Bitcoins safely in the long term?

Question

Say I wished to hold a lot of bitcoins for many years as an investment. My worry would be about the long term safety of the different wallet mechanisms. If it's a website - what if it goes bust or goes down? If it's on my phone - then what if I lose my phone?...

Correct me if I'm wrong but presumably a bitcoin is essentially a long string of numbers, so presumably I could physically write this down on paper, make a few copies as backup and bury them in the garden (or whatever), then I wouldn't have to worry about the website going down.

I guess that my ultimate question is, how can I store some bitcoins for many years without having to worry about the security of my wallet?

Answer 1

You can store the bitcoins in wallet on desktop or mobile. As it's software, you can create multiple copies of the keys and keep it in different devices, say USB, email, desktop, mobile, drop box etc

Yes you can also store it as paper, but it would be humongous to do on your own.

Answer 2

There are paper wallet software vendors. Bitcoin uses cryptography in many facets, to store value, create and sign transactions, to mine blocks, and verify blocks, etc. One of the uses for cryptography is private key generation. The valuable aspect of a wallet is your private key, it's used to create addresses and create transactions. A "paper wallet" is just a piece of paper with your private key.

Personally, I'm more worried about losing a piece of paper than I am about losing a file. Use a wallet software, back up your keys, place them in an encrypted container, and save it. In addition to your keys save the installer for the wallet software you used.

I hold a few bitcoins, nothing significant. At this point I don't think they'll ever be terribly interesting as a currency.

Answer 3

If it's a website - what if it goes bust or goes down?

There are private key storage companies that specialise in backup procedures and use multi-signature keys. If they go bust, you still have full control of your funds and just choose another provider.

Read more about how Bitgo employs these services on behalf of its users:

https://blog.bitgo.com/bitgo-release-open-source-key-recovery-service/

If it's on my phone - then what if I lose my phone?...

Most Bitcoin wallets are now Hierarchical Deterministic (HD) style wallets, which means all private keys can be restored by entering a set of random English words. As long as you don't lose those words, you can easily restore your bitcoins if something happens to your device.

Correct me if I'm wrong but presumably a bitcoin is essentially a long string of numbers, so presumably I could physically write this down on paper, make a few copies as backup and bury them in the garden (or whatever), then I wouldn't have to worry about the website going down.

You're not wrong, but most people would find this process tedious and difficult. And if you die, there's a good chance your family would have nobody to guide them through the restore process.

I guess that my ultimate question is, how can I store some bitcoins for many years without having to worry about the security of my wallet?

The best solution currently is a hardware wallet called Trezor. It is a usb device that is a mini computer capable of generating and keeping your private keys offline, even when plugged in.

Answer 4

I went on over to the BitCoin wiki. And found this information:

Bitcoins have value because they are useful and because they are scarce. As they are accepted by more merchants, their value will stabilize

You are now in the realm of precious metal or Forex type speculation, not investment.

There is some verbiage about early adopters benefiting from a rise in value of their bit coins, but also some indicating that it is pure speculation. Is it still possible to be an early adopter? Will the technology die or become the new currency?

In my own opinion I feel that there is a lot of problems with the technology and it probably will not catch on. When a person can "print" their own currency how can that currency be stable? Granted one can make a corollary to gold mining, but that lends further weight to view of bit coins as a commodity. However there could come a day in which they serve no useful purpose.