Lost Bitcoin is HODL Hell – But what’s a HODL?
Lost Bitcoin stories are dominating the news as much as Bitcoin futures trading and the Bitcoin price itself. Whether it’s the story of the chap who threw away his hard drive loaded with Bitcoin to a lost thumbnail drive worth millions of dollars in Bitcoin or the recent Bitcoin hackers who stole bitcoin worth millions from NiceHash to a Bitcoin investor watching a hacker gain access to his online Bitcoin wallet and take his Bitcoin before his very eyes, there’s collective public shock at vast amounts of money simply disappearing and gone forever.
Security expert, computer legend and cryptocurrency ambassador John McAfee is an ardent believer in using a secure digital wallet like the Trezor instead of an online wallet like Coinbase. In defense of Coinbase, they are experiencing some growing pains as millions of new customers overload their website which then crashes making access to cryptocoin held there temporarily impossible. Lost bitcoin is a very real possibility either way; if your cat jumps on a table and knocks your digital wallet into the garbage which you then toss out OR if a hacker spoofs your credentials to gain access to your online wallet so he can move your bitcoin to his account, there is certainly risk of lost bitcoin.
The most popular investment view of Bitcoin is to hold it. Over time this has been humorously adopted to hodl (Hold On for Dear Life – see a full definition of HODL here.) That’s why lost bitcoin is HODL hell.
So since both methods have their problems which one do you go with? Both of them.
IT professionals and technologists of all stripes always advise redundancy which insures reliable ongoing operations. That’s why Google and Facebook and Amazon run their businesses on thousands of different computers with multiple Internet connections. If a computer or two or ten go offline, business goes on like usual. When a single computer crashes bringing a complete halt to operations we call that computer a single point of failure. This exact same reasoning must be applied to prevent lost bitcoin.
Storing all of your Bitcoin in any one wallet is a true example of putting all of your eggs in one basket. This is to be avoided at all costs. How? You spread your bitcoin around. Definitely invest in a Trezor digital wallet for the safest, most secure method of holding Bitcoin then keep your Trezor in a very secure place. You should also keep Bitcoin in an online wallet like Coinbase. And a couple of other places, As you accumulate Bitcoin you need to bear in mind your Bitcoin is a very valuable asset. Protect this asset with an abundance of caution so you don’t end up being the next “millions of lost bitcoin gone forever” story.
A digital wallet is the vault that holds your cryptocurrency. Most people are happy with online wallets like Coinbase while others prefer the unbreakable security of a hardware digital wallet that can’t be hacked at all. John McAfee spoke about the importance of hardware-based digital wallets and as the godfather of online security itself his words shouldn’t be taken lightly.
The simple fact is that a web-based digital wallet can be hacked which means you could lose ALL of your cryptocurrency. Most often a loss of cryptocoin is intentional but in other cases it can be entirely accidental. Read this and this and this to get a better grasp of the scope of the problem where an online digital wallet is concerned.
The single safest way to store digital currency is to use a hardware based digital wallet like Trezor. Even if your computer is infected with spyware the USB-based Trezor digital wallet is unhackable. Simply speaking there’s just no other way to keep cryptocurrency secure. That’s because the hardware itself demands physical input before approving any transaction. Every single transaction requires physical interaction between the digital wallet and the transaction at hand eliminating any possibility of your cryptocoin falling into the wrong hands neither intentionally nor accidentally.
Whether you’re mining cryptocoin or engaging in cryptocoin investing a hardware-based virtual vault is the only way to go. As you know by now accidents do happen and hackers are waiting in the wings to steal cryptocoin from you and they will stop at nothing to try and rob you blind.
There’s no point in amassing a crypto fortune if your money isn’t locked up in a vault. That’s why we have banks and safety deposit boxes and this nifty new thing called a digital wallet. Before you set out to stake your claim in the cryptocurrency gold rush get yourself a Trezor or something similar to keep your treasures secure.