In Math We Trust by Simon Dingle

Author:Simon Dingle
Language: eng
Format: epub
Publisher: Jonathan Ball Publishers
Published: 2018-04-10T16:00:00+00:00

App wallets

The easiest way to get a Bitcoin wallet is to load an app on your computer or smartphone. It’s important to differentiate these from exchange and other custodial apps, where your keys are stored by a third party.

Just as you can choose to trust a bank to look after your money, you can trust companies offering cryptocurrency services to store your keys on your behalf. When you deposit money at the bank it becomes legally theirs, and likewise when you store Bitcoin with a third party it no longer technically belongs to you.

Remember that possession is nine-tenths of the law, and it’s much easier to protect what you have than argue for what you don’t.

This might make me sound like a crazy fool who keeps his money in his mattress, but it’s really just common sense. It wasn’t practical to store your money yourself in the old world. We needed banks to solve the problem for us. But in the new world of money it’s not only easy and possible to look after your own stash, but desirable too.

Remember: if you store your keys, it’s your Bitcoin. If they store your keys, it’s their Bitcoin. It’s also unlikely anyone will even know you have Bitcoin unless you tell them, whereas companies who market themselves as looking after other people’s cryptocurrency are sure to become targets for criminals.

App wallets make it easy to use Bitcoin to pay for things and some have features for splitting bills with friends, buying mobile airtime or electricity from the app, or setting up shared multisig wallets for your home, company or other uses.

After setting up a real Bitcoin wallet app, as opposed to a third-party app where someone else has your keys, you will usually be shown 12 or 24 words that are used to backup your wallet should you lose your phone or something goes wrong. These words are referred to as a ‘mnemonic’. They can be used to restore your Bitcoin wallet on any compatible app and should never be stored on your computer or online.

Write the 12 or 24 words of your mnemonic down on paper and keep them somewhere safe. Try and memorise them if you can. You might also consider storing copies in more than one location.

There are also devices such as CryptoSteel that can be used to store your words in fire, water and time-proof steel containers. Or you could buy a small sheet of metal and a punch kit to make your own version.

Remember that anyone with your mnemonic can access all of the cryptocurrency in your wallet. While losing your phone might not be a big risk to your Bitcoin balance, misplacing your mnemonic or private key can be catastrophic.

Most modern smartphones are protected by passcodes or technologies that require your fingerprint or physical image to unlock the phone. The Apple iPhone, for example, has its software encrypted by dedicated hardware in the device and cannot be unencrypted without your passcode. If the password is entered incorrectly too many times the phone will automatically erase itself.

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