VANITY: Question for anybody who has moved Bitcoin to cold storage

June 16, 2024 | E. Pluribus Unum

[E. Pluribus Unum]

I would like to move some Bitcoin to cold storage, but the thought of doing it wrong and losing it forever scares the Obama out of me.

If you have done it, how did you do it, how do you store the wallet, and what is the possibility of messing it up and losing it forever?

[palmer]

My primary concern with your “import private key” methods is that you don’t want to have your private key known by Coinbase

That's 100% impossible. I just performed a transaction at coinbase sending bitcoin from my account to an address. The only thing that coinbase saw was the address. I created the private key and corresponding address using bitaddress.org As you know the address is a one-way hash of the public key and the public key is a one way function of the private key. There is no way for anyone to know that private key.

I imported the private key into the mycellium wallet on my phone. The private key now exists in two places, my paper wallet in my safe and my phone. Coinbase does not have my private key. That is completely impossible.

Also your old Coinbase transactions can be easily “trackable” by the government or others with the old private key/public key transaction addresses

Correct and one of the many good reasons people use private keys generated by seed phrases. Every time there's a transaction with that kind of wallet the change is returned to a brand new address that the government can't trace until it is spent. However for cold storage a private key generated by the method described in this thread is fine since that will be only instance of that address on the blockchain.

(And DO NOT reuse public key transaction addresses from your new wallet for maximum privacy...one use per address).

Completely agree not only to deter tracking but to provide more security since after one transaction the public key is public, not just the address (hash of the public key). That intentional design, not revealing the public key, is part of bitcoin's overall security. But again, that doesn't apply to a single use of a private key for a cold storage paper wallet which I describe above. That is certainly not less secure than a private key generated from a pass phrase.

If really paranoid then use a “whirlpool/bit-mixer” to obfuscate/privatize the BTC that came from Coinbase:

That can be done no matter how the private key is generated.

[Drago]

If it is the “traditional” Coinbase exchange (w/”KYC”), then Coinbase generated your private key and they control it/know it....you don’t want a copy of that key. If you are referring to the newer “Coinbase Wallet” (formerly the “Bread Wallet” then bought out by Coinbase) then yes your private key is private. But most people are using the traditional Coinbase product that retains your private key on their servers and is subject to hacking, business failure, etc.. (i.e. FTX, Mt Gox, etc., etc.)

Further info.:

From Coinbase: “A custodial wallet is a type of wallet where a third party holds the private keys on your behalf to manage your funds. Using a custodial wallet usually requires you to provide certain documents as part of a KYC (Know Your Customer) process, which is designed to verify the identity of customers and ensure their authenticity.
In the case of your Coinbase.com account, Coinbase acts as the custodian.”

https://help.coinbase.com/en/wallet/getting-started/what-s-the-difference-between-coinbase-com-and-wallet

More:
https://cointelegraph.com/news/how-to-store-crypto-assets-in-a-self-custodial-wallet

https://bombthrower.com/how-to-move-your-bitcoin-off-of-coinbase-into-a-self-custody-wallet/

https://decrypt.co/116349/how-move-bitcoin-ethereum-crypto-self-custody

https://www.forbes.com/sites/digital-assets/2023/08/02/bitcoin-the-digital-bearer-asset-demystifying-self-custody-private-keys/

https://www.forbes.com/sites/digital-assets/2023/04/05/beginners-guide-to-bitcoin-self-custody/

[palmer]

If it is the “traditional” Coinbase exchange (w/”KYC”), then Coinbase generated your private key and they control it/know it....you don’t want a copy of that key.

I just transacted my bitcoin last night from coinbase to my address. I created the private key and corresponding address using bitaddress.org so it is my private key only known to me.

If you are referring to the newer “Coinbase Wallet” (formerly the “Bread Wallet” then bought out by Coinbase) then yes your private key is private

That's probably where we are not synced up. I don't have a coinbase wallet, never did and never will. I simply log into coinbases's website and transact. What I did last night is log into coinbase, transact a chunk of my bitcoin held by them to an address that I created last night from a private key that I created last night

I didn't need any wallet to generate a private key. Bitaddress.org lets me create private keys and calculates the corresponding address. There's no wallet involved although some people refer to what I created as a paper wallet.

From Coinbase: “A custodial wallet is a type of wallet where a third party holds the private keys on your behalf to manage your funds. Using a custodial wallet usually requires you to provide certain documents as part of a KYC...

Yes, that's all correct. Coinbase holds my bitcoin in their wallet (of sorts). IOW, they control various private keys with a lot of bitcoin associated with them. I own nothing in reality but in their accounting system there's a ledger entry with how much bitcoin I allegedly "own".

You have pointed it out many times, when coinbase or anyone else has the private key they have the bitcoin and you have nothing but a promise. But last night I changed that for some of my bitcoin. On their website I transacted from their holdings that are "mine" to an address that I created from a private key that I created. Coinbase (and the feds) know that address. But only I know the private key. It's in my phone (optional) and on a piece of paper in my safe (essential). So that bitcoin is now really mine.

[Drago]

OK, I somehow thought that you were making a copy of the Coinbase private key associated with your Coinbase account. Yes, “Bitaddress.org” is a “paper wallet” or stainless steel, etc. wallet, but is no better (or worse) than a new address generated by your Mycelium wallet. It is just cold/colder. It all depends if you plan to transact at all (send BTC to family/friends, etc.)...an offline “paper” wallet makes that harder for BTC “noobs”...there are ways around that with barcodes, etc.. If “cold convenience” is needed (Cold storage & able to do transactions) then a “Coldcard” is a great option.

Your method (personal offline “paper” or stainless steel word phrase wallet):

https://youtu.be/VTsHeiBhPIM?si=WTU5cvzIGB7Ks3dX

Coldcard method:

https://youtu.be/FAYmE5-40PQ?si=cTau93Z-zDbZW1Su

https://coldcard.com

I guess it is just a matter of “different strokes for different folks”...thanks for emphasizing the “paper wallet” cold storage method. I am more of an “air-gapped” HW wallet person (Coldcard).

I guess the Bitaddress.org/paper/metal option could be considered the safest cold storage method...no “electronic” access to your private key.

[Wildbill22]

I like a basic Trezor or other hardware wallet and the directions are not hard. Start with transferring a very small amount and then move up with your confidence level.

[palmer]

Thanks for that info about other options Frankly I am behind on tech because I started with paper wallets in 2016 and never switched to anything new. I have some originals in my safe and some people have my paper wallets in their safes (I gave them my word that I didn't copy their private key).

Those were the good old days.

[E. Pluribus Unum]

I like a basic Trezor or other hardware wallet...

Can you extract/backup the keys to paper so you can still access your Bitcoin if you lose the Trezor?

[riri]

They say there is untold amounts lost forever for that reason.

[palmer]

Yes. Trezor uses a seed phrase to generate private keys. The process I talked about in this thread was using private keys printed on paper (paper wallet). Trezor uses BIP-39 which uses the seed phrase (12 random words) to generate an endless number of keys: https://help.onekey.so/hc/en-us/articles/360001983556-What-is-BIP-39 Even in that description they talk about storing private keys in paper wallets.

What does that mean for average Joe looking for long term storage? I don't think BIP-39 is going away. That means even your Trezor is dead and company goes out of business, you can take your 12 words from the paper in the safe, type them into a new BIP-39 wallet from a different company and it will generate the private keys that correspond with the addresses on the block chain storing your funds.

OTOH support for a private key in the form I posted in the thread (labeled SECRET) can't go away either. That's because it's required for signing a transaction to send to the blockchain. Wallets will always support importing or sweeping a private key: https://coinguides.org/import-sweep-private-keys-electrum-wallet/

The most important thing to remember about that is when I explained the import process for mycellium, I really really wanted to import, not sweep. If you sweep a private key, the funds are transferred to a brand new address corresponding to a brand new private key (usually generated with the BIP-39 algorithm). So import is the only way I can test that my private key is ok (i.e. the paper is readable) or spend the funds if I want to spend them. Either way the remaining funds or all the funds remain associated with the address in the blockchain that is derived from the private key on the paper wallet in my safe.

Seems like knowing PKI, and paper wallet key generation, and various backup and validation methods goes beyond what most people want to deal with. Just using the hardware wallet is simpler and more secure if you don't want to know those details. In that case your store the BIP-39 seed phrase on a piece of paper in the better safe (the hardware wallet goes in your everyday safe). But I believe it is worth knowing all of that and using the paper wallet if all you want to do is store a single amount of bitcoin or just a few amounts on a couple different paper wallets. E.g. 0.1 on each of three paper wallets. I have a lot of PKI experience (since 1999) but some intricacies of bitcoin key management are unique to bitcoin, so I can't say for sure there are no flaws in the process I described.

[E. Pluribus Unum]

I really want to get my Bitcoin out of Coinbase, but everything you describe scares the heck out of me. I was a programmer and know pretty much about computers, but the fact that I could lose a lot of money if I do it wrong is intimidating.

If I get a Trezor and move $10 to it to figure all out I guess the worst that can happen is I lose $10 of Bitcoin.

Do you know how much the transfer fees for $10 would be?

How about $10,000?

I don’t expect you to have the answer, but could you point me in the direction of how to find the fees?

[E. Pluribus Unum]

Would the standalone offline version of this be adequate for recovering my keys?

https://github.com/iancoleman/bip39

Could I then use those same keys to access the Bitcoin as if I had a paper wallet?

[palmer]

The fees are dollar to a couple of dollars. The amount you transact doesn't matter. I agree on getting out of coinbase. I also agree about testing with a small amount. I did that above and so far nobody has read in the private key (posted in the thread above) and spent the $8 (now $7.97).

Coinbase seems to have lower fees than I had using the wallet on my phone. From their website:

For transactions on cryptocurrency networks (i.e., transfers of cryptocurrency off the Coinbase platform), Coinbase incurs and pays network transaction fees (e.g., miner fees). When you send cryptocurrency from your Coinbase wallet to another wallet, we will charge a fee based on our estimate of the prevailing network fees for a stand alone wallet-to-wallet send. However, the final fee that Coinbase pays may differ from the estimated fee due to factors such as batching transactions or changes in network congestion levels. All fees are disclosed at the time of the transaction.

Looks like due to batching they can keep fees a bit lower. What I suggest is following my coinbase steps to get a small amount of bitcoin ($10 worth) onto a Trezor or a paper wallet. The steps are exactly the same except that the address you provide to coin base as the destination of the transaction comes from the "SHARE" on the paper wallet or from the Trezor (it tells you the address to use as the destination address)

That address (looks like the SHARE string of letters and numbers (starts with 192DFF above). That's what needs to be cut and pasted into the coinbase website when it asks what address to send the funds to.

[E. Pluribus Unum]

Thanks. I will order a Trezor.

[palmer]

That BIP-39 code is built into Trezor, my Mycellium wallet, and every wallet that Drago mentioned. It is the industry standard way of generating private keys. You don't have to use the code at that link manually. It's already in the HW and SW wallets.

However if your really wanted to, you could use it to create separate paper wallets with each key or a paper wallet, potentially several pages, of private keys.

But as I say, you don't have to. Your paper backup can be the 12 random words making up the seed phrase. When you are ready to use that backup, buy another Trezor if you lost the old one, or buy another BIP-39 HW wallet. Or download a free wallet app that you trust (I don't have any special knowledge other than I trust mycellium for now). As long as it supports BIP-39 you can recover your keys.

[palmer]

Please let me know how that works out.

[E. Pluribus Unum]

As long as it supports BIP-39 you can recover your keys.

Thanks, I just would like to have as many ways to recover as possible.

I will let you know how my test run works.

One last question: As long as I am buying one, is there any advantage of the Trezor Model T over the Trezor Model one for my limited needs. (I am going to hodl it indefinitely and will not be spending any of it.)

https://www.amazon.com/Trezor-One-Cryptocurrency-Protection-including/dp/B00R6MKDDE/?_encoding=UTF8&ref_=pd_hp_d_atf_ci_mcx_mr_hp_atf_m

https://www.amazon.com/Trezor-T-Model/dp/B07B8Q2G3K/ref=pd_bxgy_d_sccl_2/141-9141854-3447257?pd_rd_i=B07B8Q2G3K

[palmer]

I see this comparison: https://trezor.io/compare My advice is get the model one directly from Trezor. Amazon is no cheaper, just a middleman and I avoid them. Simplest instructions I can think of: 1) initialize the Trezor following their instructions, 2) install Trezor suite on your computer (mac or Windows), 3) use the Trezor suite to display a receiving address 4) copy and paste that address into the coinbase website.

Breakdown of step 4: 4a) Log in to coinbase 4b) click Transfer (upper right) 4c) click Send Crypto 4d) type in the amount 4e) Click on the "To" button, 4f) Copy and paste the address from "receiving address" in the Trezor suite to the spot that says "phone email address or invoice" It knows what an address is. 4g) click Preview Send, double check that the address is correct. There may be a way to display the receiving address on the Trevor screen (not sure but that would be a good double check). 4h) finally click Send now.

Next steps? Write down the seed phrase. Reset or completely clear the Trezor. Enter the seed phrase to restore the keys. Look for the bitcoin address on the Trezor (probably in Trezor Suite) that you sent as your test ($10 worth). If that doesn't work then don't do a large amount.

[E. Pluribus Unum]

Thanks again.

[GunRunner]

Try the BlockStream Jade wallet. They’re only about $65, and designed by Satoshi himself.

[E. Pluribus Unum]

Thanks!