Keeping Your Bitcoin Winnings Safe 101

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Let’s say you win big at a Bitcoin blackjack casino. You won hand after hand, now you’re ready to cash out. But where should you cash out your mega-winnings? 

Even if you have decent or small winnings, you’re probably worried about cashing out to a Bitcoin wallet and keeping your hard-earned winnings safe. 

Multisig Wallets — The Safest Option?

One of the safest options for keeping your funds safe is using a multi-signature wallet. 

A multi-signature wallet works something like this:

“Imagine a bank vault that requires more than one key to open: That’s a little how multi-signature cryptocurrency wallets work (and why multi-signature wallets are typically called vaults).

You can choose how many keys are allowed to open the vault as well as the minimum number of keys needed to unlock it (e.g., you could have a 2-of-3 multisig where two out of three assigned private keys are needed, 3-of-5, 5-of-7, etc.)”

You can easily see why a multisignature wallet would be safe: in case you lose your private key or it gets stolen — it won’t be lost forever. 

You don’t need to trust several other people necessarily either. You can simply set up a wallet that requires multiple signatures and then secure the other private keys in other locations.

For example, say you create a wallet that needs two out of three signatures. Then you can separate the keys into three other locations which you control. That way if you lose access to one key, you can go find the other two and unlock your wallet that way. 

Of course, if you do trust other people then you can give them the other keys as well. 

Setting up a MultiSig Wallet

Setting up an MS wallet used to be quite a challenge. The security was only afforded to people who knew how to how or who could pay people to code it for them. 

Thankfully the infrastructure around bitcoin wallets has improved considerably. Now you can create an MS wallet easily and share it just as easily. 

One of the easiest methods is used by Bitpay and they explain the process like this:

“To create a multisig wallet, open the BitPay App and follow these steps:

  • Click the gear icon in the upper right corner.
  • Within Keys, select the key where you will create the wallet.
  • Click + Create a new wallet.
  • Select Shared wallet.
  • Select the currency, either Bitcoin or Bitcoin Cash. (Note: Ethereum does not support multisig.)
  • Enter the wallet name.
  • Enter your name (this will be your copayer name).
  • Select the number of copayers.
  • Select the number of required signatures.
  • Click CREATE.
  • Share the address/QR code with the other devices joining the wallet.”

This technology and ease of use are not limited to one provider like Bitpay. You can also find these benefits by using the web wallet of Coinbase or the mobile wallet of Ethereum. Both give excellent levels of protection for your Bitcoin bet winnings. 

Something of import to note is how you plan to use the MS wallet with your winnings. Do you plan to send your winnings in portions to exchanges? Or perhaps to other people?

The reason these questions are important to consider is that some MS wallets will ask if you want to use Segwit or legacy types of addresses. 

For example, look at the explanation from Electrum

“Segwit wallets lead to lower transaction fees. However, if you are a regular user of an exchange that doesn’t allow withdrawal to bech32 addresses you will want to choose legacy here. All cosigners must choose the same option here.”

If you’re the only cosigner, then the decision is easy. But if you’re not the only one then perhaps you should make sure the people you trust also know the difference between Segwit and Legacy when it comes to Bitcoin and its addresses and use cases. 

Who to Trust?

The problem always boils down to — who do you trust?

When it comes to trust, most people think about other people and whether or not they trust other people. But … do you trust yourself?

The New York Times reported, “Of the existing 18.5 million Bitcoin, around 20 percent — currently worth around $140 billion — appear to be in lost or otherwise stranded wallets, according to the cryptocurrency data firm Chainalysis.”

This staggering amount of value is lost thanks in large part to — human error. 

That’s right. People put trust in themselves to keep their bitcoin safe. Then they lost their master key, forgot their password, lost their laptop, and myriad other dumb things. 

If you’ve won a large amount of BTC on Bitcoin blackjack — or even a moderate amount — it would be a shame to lose it because you trusted yourself and then made a dumb mistake causing loss of private keys. 

A multisig wallet helps prevent human error and spreads your trust — even in yourself — over a wider area. It might take some extra learning and extra steps — but the safety and backup benefits are without equal. 

Good luck and stay safe!

Lisa Carter is a freelance writer and blog contributor. She writes primarily about technology, finance, and current events.

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