As the popularity of Bitcoin increases, so does the risk of physical theft; this new digital store of value might not be the obvious target for criminals now, but that doesn’t mean it will always be that way. Taking self-custody is part of the Bitcoin experience, and while you eliminate third-party risk, you now open yourself up to a first-party attack. That’s why taking precautions to protect your investment from would-be thieves is crucial.
While I am no criminologist, I think growing up on the Cape Flats of South Africa should grant me an honorary doctorate in how to deal with criminality. Violent robberies are an everyday occurrence, from hijacking transit robberies as you make your way home from work, as well as home invasions.
According to Crime Stats SA, violent robberies involving the use of dangerous weapons reached 37 829 reported incidents in the third quarter of 2022, meaning a staggering 411 people were robbed daily. As you can imagine, the number is far higher than that, as many robberies go unreported. South Africans without insurance have very little incentive to report a crime; we simply chalk it off as part of life and move on with our day.
In South Africa, we’ve seen people literally steal the shoes off your feet, clothes off your back and even the gold in your teeth; nothing is sacred or spared, so why would Bitcoin be any different?
If you are planning to hold Bitcoin, as the price rises, you paint a bigger target on your back, so how do you improve your meat space OPSEC with practical tips so you don’t get wrenched?
Well, I’ve got some strategies for you to consider.
Be discreet.
One key aspect of keeping your Bitcoin safe is to be discreet. While it may be tempting to talk about your investments with friends or strangers online or wear Bitcoin-branded memorabilia doing so can put you at risk.
By divulging too much information about your Bitcoin holdings or investment strategies, you may attract the attention of thieves who see you as an easy target.
In addition to keeping your Bitcoin investments private, it’s also important to be aware of your surroundings, who you share information with, and what you share with them. You might be sharing your Bitcoin info with a friend at a bar, but someone else could listen to your conversations.
Your privacy is your best asset, and along with your humility, you don’t want to be painting a big orange target on your back, saying wrench me.
Watch your back.
First and foremost, don’t flash your Bitcoin wealth in public. Avoid checking your account balance or making transactions on your mobile device while in a crowded area. Criminals can easily take advantage of distractions to snatch their phones or tablet.
Similarly, keep your physical devices like your BOLT card, NFC devices or OpenDimes hidden from prying eyes. Thieves may target you if they see you carrying a device that stores Bitcoin. It’s best to keep your wallet in a discreet location, such as a concealed pocket or bag compartment.
Finally, be mindful of your surroundings when using Bitcoin ATMs. These machines are often located in high-traffic areas, making them a prime target for thieves. Take note of anyone who seems to be lingering around the ATM or displaying suspicious behaviour.
If possible, use an ATM in a well-lit, secure location or bring a trusted friend or family member with you to keep guard. Remember, the key to keeping your Bitcoin safe in the real world is maintaining a low profile and considering all possible attack vectors.
Limit your hot wallet exposure.
To further increase your security when storing Bitcoin in the real world, limiting your hot wallet exposure is important. A hot wallet is a type of Bitcoin wallet that is connected to the internet and accessible via a software application like a desktop or mobile app. While hot wallets offer convenience and quick access to your funds, they also come with increased security risks.
To reduce your exposure to these risks, keep only small amounts of bitcoin in these wallets and keep most of your bitcoin in a cold storage wallet, such as a hardware signing device. Criminals could get a hold of your phone or laptop and might be able to access your wallet, so you don’t want to give them any more money; you already have to replace your device.
Cap your Lightning wallet.
If you’re using a custodial Lightning wallet, ensure that you also limit your funds left on these wallets since attackers who gain access to your smartphone or laptop can easily drain these wallets and remain fairly private.
If you’re using a non-custodial Lightning wallet through your own node, consider creating capped wallets with the help of LNDHub that you connect to your phone. That way, if an attacker does get access to your Lightning Wallet, they are limited to only the funds assigned to that wallet and not your entire channel capacity.
Remote wipe your devices.
Most modern devices like Smartphones and Laptops can be tied to a centralised cloud storage service that allows you to remotely wipe the device once it’s stolen. Ensure you’ve set up a service like this and that you are comfortable with the process.
If your phone or laptop gets nicked, you can always send a remote request to the device, and as soon as it connects to the internet, the device will nuke all the private data, such as your mobile or desktop wallet.
Use a hardware wallet.
To further enhance your Bitcoin security, it may be worthwhile to consider investing in a hardware wallet. This type of wallet is also known as a cold storage wallet, as it stores your Bitcoin offline and requires physical access to the device to make transactions, significantly reducing the risk of hacking and cybercrime.
A hardware wallet stores your private key on the device, providing an extra security layer. Additionally, hardware wallets typically come with a PIN or passphrase requirement, making it even more difficult for unauthorised access.
You can also add options like duress wallets, which compartmentalise your Bitcoin stack, so you can hand over a honeypot stash and keep the larger amount safe by having an additional phrase to unlock the total balance.
Don’t always use branded signing devices.
While branded hardware wallets are great for keeping your keys cold and protecting you from cyber attacks, they are not great for in-person attacks as they are obvious single-use devices. The Ledger, the ColdCard, Trezor and many more are obviously Bitcoin wallets and a dead giveaway that you hold Bitcoin.
If you plan to use branded hardware wallets, ensure you store them in a safe or somewhere secure in the home that isn’t obvious. If you don’t have a reliable hiding spot, you might be better off creating your own DIY hardware wallet instead, which won’t be so obvious.
Split your assets.
To further enhance your Bitcoin security, it is also essential to consider splitting your assets. This means dividing your holdings into multiple wallets and implementations with a smaller amount of Bitcoin in each.
Doing so can reduce the risk of losing all your Bitcoin in case of a security breach or theft.
Moreover, splitting your assets makes it less attractive for hackers to target you. While managing multiple wallets may seem like a hassle, the long-term benefits of added security make it a viable option.
But splitting your Bitcoin holdings is not the only way to secure your Bitcoin; you could also add a multi-sig wallet setup, where you could hand over 1 or 2 keys and still recover funds with 2 or 3 keys.
Alternatively, you could have a geographically distributed multi-sig setup so you cannot access enough keys in a single moment to move funds and would require sign-off from a third party to move funds.
Brain wallets have their limitations.
In theory, remembering 12 – 24 words is the best way to safeguard your funds; if the only way to get your Bitcoin is committed to memory, no one can take it from you. But this is assuming you’re dealing with reasonable people; criminals aren’t those folk; they could pressure you in all sorts of unpleasant ways to get you to give up your Bitcoin or put you through some severe trauma that, even if you recover from it, the memories of your seed phrase do not return.
If you plan to go down with your Bitcoin, a brain wallet is the best way to ensure no one gets anything out of you, should you pass on with your keys in mind only.
Give up your insured items.
When considering the loss of bitcoin that you hold in self-custody, you have to realise that once it’s gone, you’re not getting it back, or rather the likelihood of recovering funds is slim.
Instead of giving up your Bitcoin, you could offer up your insured items instead. While household and auto insurance may seem unnecessary, it offers a cheaper alternative to losing your Bitcoin during a home invasion.
Keep cash as a bargaining chip.
Criminals are not interested in your Bitcoin, they’re simply looking for a quick score, and even if they do get some of your Bitcoin, they would need to find ways to liquidate it.
Instead, you could hold cash in your wallet or in your home as a welcomed distraction; criminals, especially ones pressed for time, would instead grab physical cash than bother with items they need to flip into cash and clean without much of a trail to them.
KYC’d satoshi failsafe.
KYC sats are frowned upon by Bitcoin due to the invasion of privacy, but bitcoiners can get some good out of a bad situation. If you are using a KYC exchange, you might want to consider keeping some Bitcoin with a custodian, like an exchange or a custodial wallet, as a honeypot.
Yes, you run the risk of having your custodian rug you, but it might be worth having a few satoshis on an exchange that you’re open to losing as insurance. At least if an exchange steals from you, there is still a chance you could get back a few cents on the dollar versus a successful in-person attack.
In case of an in-person attack, you could hand over your exchange account details and satisfy the attacker’s thirst for your funds. Once you’re out of harm’s way, you can inform your exchange or custodian of the attack.
KYC sats are easy to blacklist, as the exchange holds all the data on those UTXOs. You can request access to that data from the exchange and use it to have those coins flagged and possibly seized if they hit another exchange without being CoinJoined.
Set up a deadman switch.
If you want to safeguard your Bitcoin for your family in case of the worst, you could set up a deadman switch. If you stop responding to the service, the deadman switch allows you to automate a message on how to recover your Bitcoin that is fired off to a loved one, trusted friend, or business partner.
You are the easiest access point to your Bitcoin.
Protecting your Bitcoin from physical theft is crucial in today’s world, and it will only become harder as the price of Bitcoin rises, especially as others who have no Bitcoin become desperate. The world is not all sunshine and rainbows; it’s filled with people all too happy to violate your property rights for a small fortune.
It’s up to you to put as many hurdles between you and your Bitcoin; while it might be annoying when you want to access your Bitcoin, remember that each layer helps add hoops that attackers need to jump through too.
While there is no guaranteed way to keep your investment completely secure, the tips we’ve shared can significantly reduce the likelihood of theft or, at the very least, limit the amount stolen.
You can outsmart even the most determined thieves by being discreet and vigilant and using a combination of techniques such as limiting wallet exposure and using a distributed keys wallet.
Always remember to stay proactive and take steps to protect yourself.
As the value of Bitcoin continues to rise, it is more important than ever to safeguard your investment and improve both your online and offline security.
As Benjamin Franklin said,
“An investment in knowledge pays the best interest.”
Stay informed, stay curious, stay sceptical, stay vigilant and stay safe.
Do you take self-custody of your stack?
If you’re new to Bitcoin and have not ventured down the self-custody rabbit hole, what is stopping you? If you’re already self-sovereign, how has the experience been since you took hold of your funds? Let us know in the comments down below. We’re always keen to hear from bitcoiners from around the world.
