“Semi-Cold” Storage

So with all the recent thefts of bitcoins and other crypto-currencies, if one plans to maintain a long term position in these currencies, semi-cold storage can be implimented in order to minimize risk of theft.

 

1. Download VirtualBox. This is one of the best emulators around.

2. Create a fresh ubuntu virtual machine for each currency that you want to maintain cold storage for. I use Ubuntu 12.04.

3. Upon installing Ubuntu, apt-get update, apt-get upgrade, and install any basic security practices (such as iptables (default drop all incoming connections – allow only the bitcoin daemons ports to be open…fail2ban, etc).

4. Install your alt-coin daemon of choice, allow it to sync to the network, generate a few addresses so that you can deposit to your semi-cold storage, and then encrypt your wallet.dat.

5. Turn off the virtual machine. Only run it when absolutely necessary. Always update and upgrade and apply any security patches upon rebooting prior to decrypting and using your wallet.

Alternatively instead of encrypting the wallet, you can just copy down the private key, then delete the wallet.dat file. Now the only access to your Bitcoins is through importing this private key again.

* Always test your semi-cold/cold storage by depositing a very small amount and then making sure you can access the storage.

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