Prevent Bitcoin Gunpoint Robberies with Secret Wallets
Over the weekend a home invasion occurred in the UK. The intruders weren't there for jewelry, TVs, or any of the common items targeted in a traditional robbery. They were there for Bitcoin. The tied up the homeowners and made them transfer their bitcoin to the thieves' digital wallets and then promptly left.
Keep it Secret Keep it Safe
This is a scary situation for people new to bitcoin, however, this is not a new concept. Thieves have been robbing people at ATMs for years. Just as banks have installed security measures for this, there are many precautions you can take to prevent these types of thefts from happening to you and your bitcoin. The number one thing to prevent a bitcoin theft at gunpoint is to not make it know how much bitcoin you own. With the explosion of bitcoin and cryptocurrency, in general, a lot of people have achieved great wealth very quickly and they choose to brag about it. This puts a target on your back to anyone with the capacity to commit a crime like this. Keep your wealth to yourself and you greatly reduce the risk of a robbery.
Hidden (secret) Wallets
While being guarded about who you share your Bitcoin status with (especially online) is critical, there are additional steps you can take to safeguard yourself from a total loss in a scenario like this. Hardware wallets are the most secure way to keep large amounts of bitcoin. You can read more about these wallets in CoinNinja's article of storing bitcoin.
Many wallets have ways of creating secret wallets. One of our favorites, Trezor, makes it very simple to create distractionary "passphrase" wallets. Once you create a Trezor wallet, the software gives you a set of 24 recovery words which you can use to recover your bitcoin if you lose the device. These recovery words are created at random and are used to populate the wallet with your private keys. By activating their "passphrase" wallet feature, you can create a whole new wallet with a different set of private keys. The passphrase you supply acts as the 25th word.
How to use secret wallets during a forced robbery
What does this all mean? After you put in your pin to unlock the Trezor if will ask you for a passphrase. This can be any word you choose. Depending on which word you enter an entirely different wallet with be available. To use this feature to your advantage, A long and very hard to crack passphrase can be used to create a wallet where you store most of your crypto wealth. Once you have set up the main wallet, log in again with a different easier to guess passphrase to generate a brand new wallet. Transfer just a small percent from the main wallet to the simple passphrase wallet. In the highly unlikely event that you find yourself held at gunpoint to transfer crypto funds, you can enter the smaller wallet passphrase and only that fractional balance will show and be able to be forcibly transferred. The thief will never know about the larger balance.
Cryptocurrency is a new form of storing your money and will soon be used worldwide by many people. It is important to make sure with a new form of currency new forms of security is created and adopted by the people using it.