Safety ain't sexy,
but nothing matters more.
— A Fact
I wrote Five Dollar Wrench to help people keep themselves and their Bitcoin safe. I hope to do this by telling a story that makes people think about the responsibilities that come with Bitcoin ownership.
Here are five things I wish more hodlers understood:
Social engineering attacks are real, and they are preventable. These attacks will become more common and more sophisticated in the future. The easiest way to protect yourself is secrecy. A thief can't steal your Bitcoin if a thief doesn't know you own Bitcoin.
Bitcoin is on the blockchain. It is not stored in your wallet or on your device. It's not on your phone or your computer. It's not in your hardware wallet. And it is not in an app. Your wallet holds the keys needed to access your coins.
The words in a seed phrase are used as your unique variable in the math that generates a Bitcoin wallet. The words are entropy, which is a measure of how hard it would be for someone to guess. This is why seed words are random. Being random prevents anyone from being able to guess the entropy used to generate your wallet. You can restore your wallet on a new device by entering your seed phrase, because you're restoring the entropy, but anyone who finds your seed phrase can do this too, which brings me to my next two points...
Your seed phrase is the backup for your wallet. Lots of Bitcoin has been lost by people who didn't write down their seed phrase, or they did something foolish like write the words but split them up. When something went wrong, they couldn't recover their wallets. Don't let that happen to you. Write your seed phrase on paper, and make a metal backup in case the paper gets damaged.
Store the paper and metal backups somewhere a thief can't find them. A thief can't steal what a thief can't find. Never enter your seed phrase on your computer, phone, or any device that can connect to the internet. Never type it in an app. Never. By keeping your seed phrase 100% offline, you make your Bitcoin unhackable.