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Bitcoin Storage

Bitcoins are stored in a bitcoin wallet and can be accessed by anyone with the private encryption key. If your private key is compromised then the bitcoins could be transferred to a wallet for which you do not possess the private key. There have been multiple thefts amounting to hundreds of thousands of dollars including the infamous MyBitcoin which absconded with many bitcoins, including a lead Bitcoin developer’s , and Bitcoinica where over 1 43,000 bitcoins were stolen and a few months later an additional18,000 were found. It is like physical gold which can either be in your physical possession or entrusted with a third party so likewise a bitcoin wallet can be in your possession and/or the possession of a third-party. For your personal possession only I recommend using the Bitcoin software 4 or the Bitcoin Armory . This can be cumbersome and if you lose the 56 private key contained in the wallet.dat file then you will not be able to access your bitcoins. For the particularly savvy you could even use a ‘brainwallet’ which may be the most secure method available .  An extremely easy tool is the Blockchain.info online wallet . The private 8 keys are encrypted in your web browser before being sent to the Blockchain.info server so it is not possible for them to abscond with the bitcoins. There are easy to use Android and iPhone Blockchain apps. My favorite is Breadwallet. For almost all use cases a combination of Breadwallet and Armory will provide a security profile to very securely protect your bitcoins. The main risk is that the client side encryption of the private key could be compromised by the Blockchain server. But if you are only keeping a few hundred dollars worth of bitcoins then I think they are the easiest and most secure option.

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