We are officially in uncharted territory now with bitcoin hitting an all-time high of over $19,000 as of earlier today. I remember when I first got into bitcoin and people were saying it would never go above $5,000. At any rate, most people are hearing about bitcoin from either word of mouth, family who have already invested, or various news outlets. This is an unprecedented time as BTC has never been this high and currently, there is no end in sight.
Some of you may be wondering “Now that I have bitcoin, what do I do with it?”. Well, you can obviously hold it on your online account, likely at Coinbase. You can spend it on some popular websites like overstock.com for a new pillow or expedia.com for vacation packages. You can also send it to family overseas or as a Christmas or holiday gift.
But how secure is your bitcoin really? As you may have heard, there is a very tumultuous history with bitcoin being used for a wide array of nefarious activity and even being used to launder dirty money in some cases. In my opinion, this only validated its utility, as bitcoin does not care who you are, where you live, or what financial or social status that you have.
Below are 3 major reasons why you need a cryptocurrency hardware wallet, and quick:
1.) MULTIPLE BITCOIN EXCHANGES HAVE BEEN HACKED – You may have heard in the news that exchanges such as Poloniex, Bitfloor, and the infamous Mt. Gox (in 2011) have all had issues with bitcoins being hacked and online wallet accounts stolen and being drained to ZERO. The issue with leaving your coins sitting on an exchange is that THEY (the exchange you bought it from) control the private keys and therefore are in complete control of your cryptocurrency. Once it’s purchased, you can transfer your coins to various wallets either on your desktop, another website, or preferably offline onto a bitcoin hardware wallet, where it has zero chance of being hacked. This is the smartest way to hold your money. You wouldn’t buy an investment property and give the bank the only copy of your keys would you? I didn’t think so.
2.) BITCOINS ONLY HAVE ONE PRIVATE KEY – The private key is the holy grail to your bitcoin. Without it, you don’t have control of your coins. Period. The way the protocol works is you have a public key (Your wallet address), and your private key (your bitcoin itself). Together they form a digital signature that authorize the control and ownership of bitcoin and their transactions. I don’t know about you, but if I am investing in something valuable, I want to retain control of it and protect it, not trust a 3rd party to do so. You can review an article here where a man “accidentally” threw away a hard drive with over 7,500 bitcoin on it (currently valued at over 125 million dollars as of this writing)
3.) TAX REASONS – Now this is a bit controversial, as this topic is still not perfectly clear in terms of how bitcoins are taxed. Because they are not issued by a bank or a government agency, the IRS cannot subpoena any other organization for your spending habits and overall holdings. Because it is decentralized, they don’t have a single point of failure to intimidate to hand over your personal information. Except for the recent incident where the IRS requested all user data from Coinbase containing user transactions that exceed $20,000 (You can read more about it here). As it currently stands, if you hold your cryptocurrency offline, how can the government subpoena your hardware wallet if they don’t know where it is stored? It would be like if you had 30 bricks of gold buried in a secret place and the IRS knocked on your door and told you to hand it over. You have plausible deniability as they have no way to confirm it unless you handed it over to them voluntarily.
We specialize in offering the industry’s most trusted hardware wallets offline, and believe in having the intangible, tangible. Feel free to contact us through the contact form if you have any comments or questions regarding this. I would be happy to assist and clarify any questions you may have. Happy wallet shopping!