Much ink has been spilt discussing the finer points of self-custody cold wallets. From heads-up comparisons, to in-depth security analyses, to the best cold wallets for 2023, the internet will take good care of you when it comes to choosing the right self-custody cold wallet.

What doesn’t receive as much attention is how to create and maintain a proper cold wallet safety regimen. This deserves as much or more attention then choosing the very best cold wallet.

That’s because self-custody cold wallets are like guns. You probably need one, but if you don’t know what you’re doing, you’re much more likely to hurt yourself rather than some hacker absconding with your crypto. So this article will be focusing on just that. How to avoid shooting yourself in the face with your self-custody cold wallet.

So behold! I present to you the Four Cold Wallet Security Commandments . . . and some other considerations.

Commandment #1: Write Down Your Recovery Phrase

Source.

Disheveled Dan didn’t have the patience for his Ledger Nano X setup booklet. That’s why he failed to write down his recovery (or “seed”) phrase. So when Disheveled Dan predictably lost his Nano X, he also poured his all his BTC down the drain forever.

Explanation

The golden rule of cold wallets is to write down your recovery phrase. The recovery phrase recovers your crypto in the event that your cold wallet device is lost, stolen, or damaged. Simply input the recovery phrase in a new cold wallet device and those funds are then recovered there. Note that when a recovery phrase is used, the old wallet is automatically wiped clean, so the funds will no longer be accessible on the former device.

Remember this: you can lose your cold wallet device, or you can lose your recovery phrase, but you cannot lose both.

If you lose your device, use your recovery phrase to recover your funds. If you lose your recovery phrase (assuming no one stole and used it), retrieve it again from your device. But if you lose both, well then it’s game over, thanks for playing. Your crypto is gone forever.

Commandment #2: Write Your Recovery Phrase on Physical Paper

Source.

Tech Timmy was a real tech genius. Paper and pen are so 17th century, so who needs these silly hard-copy recovery phrase sheets that came with his new Trezor Model T. Instead, Tech Timmy emailed himself his recovery phrase. That worked great until someone gained access to his account, stumbled across the email titled “Trezor Recovery Phrase”, input the phrase on a new device, and was granted all of Timmy’s ADA stash. Poor Tech Timmy was in for a real surprise when he later opened his Trezor to see a zero balance.

Explanation

Never write your recovery phrase in any digital format. This phrase should only be transcribed and kept on physical paper. Having the recovery phrase in digital form exposes you to online threats, and thus defeats the entire purpose of a cold wallet.

Commandment #3: Store Your Recovery Phrase and PIN in a Separate and Secure Location from Your Cold Wallet

Source.

Efficient Elenor was all about efficiency. That’s why she stored her recovery phrase, access PIN code, cold wallet together neatly in her office desk drawer. That wasn’t an issue until her ex came looking for revenge and found this package. He got his revenge indeed by acquiring all of Elenor’s ETH!

Explanation

This one is pretty simple. Prying eyes and quick hands might think your cold wallet looks interesting. So for the love of everything good and decent, don’t store either your recovery phrase or PIN in the same location as the device itself! In the wrong hands, the device alone is useless. But give those wrong hands the device and PIN (or just the recovery phrase), then kiss your crypto good-bye.

And if you haven’t figured it out by now, make sure you store your recovery phrase and PIN in a secure location. Secure areas of the home, personal safes, and safety deposit boxes all come to mind.

Commandment #4: Store One Additional Copy of Your Recovery Phrase in a Separate, Secure Location

Source.

Unlucky Uriah was always getting the shaft. Both his cold wallet and recovery phrase were destroyed when lightning struck his house and burned it all to the ground. Now all his DOT is destroyed too!

Explanation

Another straightforward commandment, but often not followed! Store one additional copy of the recovery phrase in a separate, secure location from your other recovery phrase. When thinking about the two locations, run through some low-probability, high-consequence events and ask yourself, “could one adverse event take out both copies?” If the answers are no, then you’re good to go.

How to Keep Your Crypto Safe: Other Considerations

If you’re able to follow the four commandments above, then you’ve done a decent job and will likely not shoot yourself in the face with your cold wallet. Congratulations.

However, let us hone in on some other considerations when it comes to cold wallet hygiene.

Consider Your Unique Situation

You need to consider your situation, and use your own brain to figure out what security measures are appropriate for you. Are you storing $1,000 or $500,000 in your cold wallet? How much of your net worth is in the cold wallet? Who all knows that you own crypto? How secure is wherever you’re storing your recovery phrase and PIN? Who all has access to these locations? These are just some of the questions you’ll want to ask yourself. Tailor your security measures accordingly.

Consider Writing Your Recovery Phrase on a Metal Tablet

Paper and ink. You just can’t trust them. Fire, water, and Grandfather Time will reduce your recovery phrases to dust. There are plenty metal tablets on the market designed to protect your recovery phrase from the elements.

Consider Concealing, Scrambling, or Separating Your Recovery Phrase

If you were certain that no one would ever find your recovery phrase, then labeling it appropriately and writing the words in order is the obvious action. However, if there’s significant risk that someone will find your phrase, then there’s a few actions you can take to further protect yourself.

Concealing: You could write a short story, letter, or poem with one recovery word in each sentence. No one would ever likely suspect that your recovery phrase was hidden in the text.

Scrambling: You could write the words in an alternate order than what’s set in your wallet. This makes the list more difficult to use by a thief.

Separating: You could divide your phrase into separate lists, and disburse these lists in various locations. Instead of having one list of 12 words, have three lists of four words.

Note that there are certain risk trade-offs with each of these strategies. You might forget your words with the concealment or scramble method. And you’re more likely to lose one of three lists rather than just one. You need to think about the second-order risks for each action you take.

Consider Having a Back Up Cold Wallet on Stand By

Having a clean back up cold wallet on stand by is not a terrible idea. If you discover that your recovery phrase has been compromised, then it’s a race against the would-be thief for who can first use the recovery phrase on a new device.

Consider Memorizing Your Recovery Phrase

Remember when King Saylor said you can cross any border all while securing your bitcoin within your own head? This is what he was talking about. I recommend memorizing your recovery phrase regardless, but you’re playing Russian Roulette if you don’t have any physical-backups.

Conclusion

Taking self-custody of your crypto is a liberating experience. It truly does help an individual break away from the clutches of the modern banking system. However, this liberation comes with a degree of responsibility and risk. So take time to analyze your self-custody security environment, and then initiate some steps to improve your security posture. Even small changes can make a huge difference! Best of luck, and I hope some of the ideas expressed here will help you better secure your assets.