"As long as there is a means of converting bitcoins into real money, criminal actors will have an incentive to steal them."
- The FBI - (emphasis added)
Let's give the FBI a big "shout out."
We're so glad the FBI knows what "real money" is, right? If they didn't, how could they fight counterfeiting? (Ding, ding, ding, ding, sarcasm alarm...)
This is a revised and improved version of the very first article I published here on Steemit. It needed to have several links fixed, and needed some improvements.
I would have simply edited the article, but the Steemit user interface doesn't (yet) allow content creators to edit their old files.
To be truly secure, hold your own private Bitcoin keys.
Image courtesy of Alexandra / München and http://pixabay.com
If you "own" some bitcoins,
have you considered the counterparty risk?
"Counterparty risk" is the very real risk that you take by allowing someone else to hold the private keys to "your" bitcoins. If you have stored your bitcoins with an exchange or any other third party, you are trusting that party to return them to you upon your demand. You are also trusting them not to lose them to theft or other malfeasance.
Image By Bitboy (Bitcoin forums) CC0, via Wikimedia Commons.
Hearing about Bitcoin exchange failures,
(such as Mt. Gox and Bitfinex)is enough to spook a lot of people who otherwise might want to be involved in cryptocurrency.
Personally, after "loosing it all" some time ago in the Mt. Gox debacle, I vowed never again to let that happen to me. If you have been around cryptocurrencies for a while, you know that the only way to truly guard and protect your coins is to create and hold your own private keys and to keep the bulk of your holdings in "Cold Storage".
One of the problems I ran into while trying to set myself up as my own “Private Bitcoin Banker” was paranoia over generating a truly secure private key. For example, I wondered about the methods that involve jiggling your mouse on a webpage... hmmm...
Then I read about how to generate a key in the privacy of your own home with a single, ordinary, six-sided die. You can read that description yourself on http://bitaddress.org on the “Wallet Details” page.
Ordinary Six-Sided Dice
Image By Diacritica CC BY-SA 3.0, via Wikimedia Commons.
When I tried that method, however, the http://bitaddress.org web page would not function on my offline Raspberry Pi computer. This left me with no good way to convert the resulting base six key into a format that my Armory wallet would accept.
After wasting considerable time looking for a base six to base sixteen conversion utility that would run on my "Cold Storage Raspberry Pi," I decided that instead I would use dice in a slightly different way to generate a base sixteen (a.k.a. hexadecimal) private key directly. Here's how I do it:
I use four dice instead of one. Each time I roll the dice, I record the result as a four-bit binary number. Rolling the dice twice produces a complete byte.
After 64 rolls of the dice (whew!), I have a full 32-byte, 256-bit value. I then convert that value, hexadecimal nibble by nibble, into a 32 byte hexadecimal private key.
For my convenience (and now yours as well!) I created a worksheet for recording and converting the dice rolls.
For the truly paranoid, if you are uncertain about just how random your dice may be, you may want to read the Diceware page and this article about making dice rolls more random.
Print The Worksheet Below and "Roll Your Own" Bitcoin Private Keys!
I hope this procedure is pretty clear, but I'll be happy to answer any questions you may have in the "comments" section below.
Click on the worksheet image for a full-sized version.
Print as many copies of the worksheet as you need for your own key-generating pleasure.
Why not find a handful of dice and give it a try?
You've got nothing to lose but your paranoia.
Hold your own keys...
Image courtesy of Daryn Bartlett and http://unsplash.com
Visit my Library Technology Shelf for more crypto articles.
FIN
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