In this guide, we will show you how to set up Bitcoin Cold Storage Wallet.
Cold storage in the context of Bitcoin refers to keeping a reserve of Bitcoins offline. This is often a necessary security precaution, especially dealing with large amounts of Bitcoin. For example, a Bitcoin exchange typically offers an instant withdrawal feature and might be a steward over hundreds of thousands of Bitcoins. To minimize the possibility that an intruder could steal the entire reserve in a security breach, the operator of the website follows a best practice by keeping the majority of the reserve in cold storage, or in other words, not present on the web server or any other computer. The only amount kept on the server is the amount needed to cover anticipated withdrawals.
“In simple terms, cold storage refers to keeping your bitcoin completely offline. Cold storage, also known as a cold storage wallet, is the opposite of a hot wallet where your bitcoin is kept online. Since Bitcoin is a digital asset, keeping them online increases your risk or attack surface for having your bitcoin stolen when kept online using a custodial service. By keeping your bitcoin in cold storage, your attack surface is greatly diminished.”
The first step to getting your bitcoin into cold storage is creating an offline Bitcoin address. This address will have both a public and private key-pair which never goes online (until you’re ready to spend it). With this guide, we will show you how to make a free cold storage wallet using the paper wallet method. -(Source)
Navigate to https://tools.bitcoin.com/paper-wallet/ while we are on the page make sure you save the website on your desktop (computer). To do that press CTRL + S on your keyboard or right-click and select CTRL + S.
After saving the page on your desktop completely disconnect from the internet!
Make sure you open the website that we saved on our desktop.
Once the page is loaded move your mouse around on the page and/or type some random characters into the text box to create extra randomness. By doing this we created a random Bitcoin address that has both a public and private key pair. Since we saved the file locally and are not connected on the internet, the bitcoin address that we created was done completely offline.
To safeguard this wallet you must print or otherwise record the Bitcoin address and private key. It is important to make a backup copy of the private key and store it in a safe location.
Once we ‘ve printed or made a backup of our Private key and Address let’s learn how to receive coins.
To receive coins copy the address that is located under SHARE on the previous image and send it to the person that wants to send you coins.
To keep track of the transactions visit https://blockchain.info/ and on the right side write your address (the one that you’ve send to the person that wants to send you coins). And you will be able to look at the incoming transaction.
To send coins we need to import the wallet from the offline world into the online world.
Next we’ll be using Blockchain.info to access our Bitcoin Paper Wallet. Click here to learn how to create an account on Blockchain.info, once you have created an account please continue this guide.
This is what it looks like after enabling all the important options for securing your wallet.
Once we are ready to move on, click on SETTINGS from the menu choose Addresses and where it says Import Bitcoin Address make sure you type the private key and click Import.
After importing our private key the coins will be automatically added to our address and ready to be used.
Once you have successfully moved your cold storage funds online, they are ready to spend. Note: Never reuse cold storage wallets. Once you have redeemed them online, follow the process outlined above to create a new one when necessary.
Congratulations On Your New Wallet!
If you need assistance please check out the Blockchain Support Site!