Imagine that through some sequence of events, crooks or criminals learn that you are the proud owner of a handsome stack of satoshis. Whether through poor operational security on your part, a customer data breach or by other means, it doesn’t really matter. They know (or assume) that you own and control the private keys to a stash of BitcoinBitcoin1$ 23,004.100.18%-6.01%-15.89%details.
And now they know where you live. Add in one of Bitcoin’s pre-programmed bull cycles, and now, our hypothetical criminals decide it’s worth paying you a visit. Upon visiting you, they physically coerce you to hand over your stack.
As any bitcoiner who has been in the space for more than a few months knows, there are no takebacks on the bitcoin network. No one is coming to save your ass if you’ve already transferred your bitcoin. If it gets to this point and you haven’t already thought about what you might do, you’ve lost.
What’s the solution to the dilemma?
- Option 1: Decoy Wallet
A decoy wallet is one that you load with enough bitcoin to satisfy a thief, but not so much that you wouldn’t be willing to sacrifice it in an emergency.
- Option 2: Upgrade Home Security
Lock your doors. Get rid of the key you have hidden under a rock next to your front door. Consider surveillance systems. Lock your windows.
- Option 3: Geographical Separation
You set up your hardware wallet and back up the BIP 39 seed phrase. If neither of these is in your home, then you can’t be coerced during a home invasion to sign a transaction handing your bitcoin over to an attacker, and they can’t get their hands on your seed phrase to send your satoshis to their wallet.
- Option 4: Multisig Wallets
With the “m of n” multisig Multisignature (multisig) wallets are cryptocurrency wallets that require two or more private keys to sign and send a transaction.Learn more standard, you must sign with a quorum of the signing devices to move any of your cold storage funds. With this strategy, you introduce a level of friction that shouldn’t be too much of an issue for genuine cold storage funds but introduces significant complications for a $5 wrench attacker.
Treat your bitcoin like its value is 10 times greater than the present price, because it will be.