Good news: I have a fraction of a Bitcoin. Bad news: I have no clue how to keep it safe. it is sitting in my Robinhood account along with my other stocks and ETFs. Now I keep hearing the need for hardware wallets, key encryption and stuff like that, and that makes me very nervous. I want to know why do I need these - is not a huge exchange like Robinhood good enough to keep my coins safe?
I plan to hodl till the end of time (or until I become a millionaire, whichever happens first) so I need a long-term strategy for the safety of my beloved coin. I have a hefty password on my Robinhood account and 2FA setup as well.
If you are knowledgeable about this topic: what is the best way to keep this thing safe? Do I need a hardware wallet, and if so, which one?
You can assume I know nothing about Bitcoin other than that it can be bought and sold!
A hardware wallet is by far the safest method of holding crypto-currency over the long term but they typically cost upwards of $50 so IMO not worth it if you have only small amounts. But if you are holding for a very long time, and especially if it’s worth a lot of money, then they definitely are the way to go.
These sites are unregulated. Mt. Gox used to be the largest Bitcoin exchange in the world and faked a massive hack and declared bankruptcy. The CEO was sentenced to 30 years in prison and some of the BTC has been recovered. But these exchanges could potentially disappear with your precious coins. If you have lots of money in one of these exchange wallets then you risk losing it all if the site goes belly up or if some hacker manages to get inside the site. How big that risk is I don’t know, but a hardware wallet means the crypto is in your possession rather than in the exchange’s. There are online wallets, away from the exchanges, which might be a little bit more secure. But nothing is as secure as a hardware wallet.
Bitcoin exchanges are completely unregulated, unlike banks, so if you leave your bit of a Bitcoin with the échange, you are essentially giving control of your asset to complete strangers, who are not subject to any government review, standards, or deposit insurance requirements. That’s a feature of e-currencies, not a bug. Until someone buggers off with your Bitcoin, of course.
You do not have a fraction of a bitcoin. Robinhood has a fraction of a bitcoin that they solemnly pinky-swear they’ll look after for you. If you can get them to transfer it to you, then you can store it in any way you’d store any other number: Save it in a file on your computer, print it out, write it in crayon on your refrigerator, whatever. Or multiple such places, if you’re worried about losing one of them.
A cold wallet (similar to a USB key) is a good idea. Some people literally use pieces of paper, etched metal, or whatever, to store their codes. Some people will split them up. Apparently smartphone apps are fairly secure as well.
This. You don’t actually have a piece of a bitcoin. You CANNOT transfer it from Robinhood to your own offline wallet. You will have to cash your holding out and then move the cash to your bank or PayPal.
You can’t transfer any coins into or out of Robinhood. To use Robinhood, you must purchase crypto using the USD fiat currency via a connected bank account. You can’t move your coins unless you sell them for cash. Coinbase provides a digital wallet for users, so you can transfer supported currencies to your Coinbase wallet and use it to make crypto to crypto trades.
Absolutely agree with other replies. Get it into your own personal wallet. Otherwise it is not actually yours. And absolutely positively make sure you have the password, access code, hard written in multiple secret places. This is as if you have to have the serial number of a dollar bill written down/memorized if you ever want to spend it. If you forget it. It is GONE.
I do not personally know the ins and outs of Bitcoin wallets. Do some solid research. Then get any Bitcoin you have into a secure personal wallet.
a) cash out and enjoy the money
b) cash out and then buy the equivalent BTC on another site that does let you transfer to a hardware wallet. I would also recommend Coinbase for this as they seem to be the most user friendly site, and there are plenty of tutorials that can help with it. (Coinbase also has a digital wallet which is more secure from hackers etc but still not as secure as a hardware wallet)
c) keep it in Robinhood, hold on for dear life and hope they are still operating when you finally decide to sell. Not sure how easy it is to pass on this holding to a loved one if you hold on beyond dear life.
Not being able to do any actual bitcoin transactions through a “bitcoin exchange” is a huge red flag for me. That sounds extremely likely that there isn’t even any actual bitcoin involved at all, and fairly likely that they’re intending to just abscond with all of the investor money as soon as they have enough.
Suppose there were absolutely no regulation (obviously, in real life, there is to some extent). Now let’s also say I do not want to deal with the expense, security implications, etc., of “actual bitcoin transactions”. What I could do is offer my speculative customers trade in bitcoin “derivatives”, as it were, where you are able to buy and sell bitcoins, and related options, except I do not transfer any coins to or from you; at the end of the day everything will be settled in your choice of US$, GB£, or €. I may even own a stash of actual bitcoins, and if I am prudent I could even run such a business in a way that it does not instantly crash and annihilate everybody’s holdings, at least for a while.
Yeah, a legitimate business could offer “bitcoin speculation” without there being any actual bitcoin involved: Offer up contracts to the effect that “If you pay me the current market price (plus some transaction fee) for one bitcoin, then at some point in the future determined by you, I will pay you the current market price (minus some transaction fee) for one bitcoin”.
But it still looks awfully fishy, to me, especially coming from a company that doesn’t have a long track record of similar deals in other commodities.
It sounds like Robinhood is not actually purchasing and holding Bitcoin in a Robinhood wallet. So the Bitcoin you are supposedly owning/holding are not real at the moment.Rather they are contracts of some sort with unknown to you contractual obligations and loopholes that are far removed from the actual solidity of a Bitcoin. Similar to gold certificates, versus actual solid gold. The chain of ownership or even possible ownership can be very shaky. As with contractual gold, your Bitcoin may be subject to rehypothecation. ( not sure of the spelling ). More than one owner of the thing. And finding out that you cannot actually get the thing when it matters. Because they have sold more contracts on the thing, than the actual quantity of the thing.
