Last updated September, 2017
It doesn’t take much time around the cryptocurrency space to start hearing and learning of a disturbing trend – theft. Since the currencies are digital, the theft happens via hacking. Sometimes the hacking is as simple as a roommate seeing where you store your password paper, and other times it is quite involved with phishing schemes where people pretend to be representatives of exchanges. There was also a case of a currency exchange being hacked and then thousands of ether coins being sent to the hacker’s wallet.
With all of these horror stories, it’s hard not to be paranoid. However, it’s fairly easy to keep yourself safe.
- Don’t visit sites and download things you shouldn’t be (like illegally ripped movies, programs, video games, and porn sites). Often times, ‘free’ files will contain a virus or trojan horse sort of malicious code
- Keep an up-to-date virus program on your computer
- If you have a wallet on your phone, use it like you would use your regular wallet – don’t carry all of your funds around in your pocket, just your spending money!
If you happen to be super paranoid (like me), or you have a large amount of ether (I wish), then the best protection is either a hardware wallet or generating a wallet on an offline or air-gapped computer.
An offline computer would be a computer that is temporarily disconnected during the creation of the private keys. One step better is to generate the wallet on an air-gapped computer – a computer that has never, and will never, be connected to the internet. If it isn’t connected, it can’t be hacked unless a hacker sits down in front of it in your home.
These are the steps to generate an Ether Wallet on an offline computer
- Download the Ether Wallet software from Github. Here is the link, but you shouldn’t really click on it (another common trick of hackers is to duplicate github code and post it under a similar name after they’ve hacked the code so that when you send money it goes straight to their wallet instead of yours). https://github.com/kvhnuke/etherwallet/releases/latest
To find the correct and current link, visit https://www.myetherwallet.com and look for the links at the bottom of the page to download the “Github: Current Site and CX”
To be extra safe for the extra paranoid, find 2 or more good sources and make sure they are all linking to the same URL. Then you know you’re good (unless of course a hacker has hacked all of the sites you checked and added their link. The more you find, the less likely it is). Some places would include the official reddit thread for ether that lists wallets on the side.
- Put the downloaded ZIP file on a device that is clean – I like to burn things to a new CD because it’s cheap and because then I know that I’m not moving any malicious code or files over to my airgapped computer.
- Unzip the files and double click on the index.html file, and it should open up in your web browser. Don’t play around with any files in the folders/zip file, you need all of them.
- Enter a strong but easy to remember password – this will be used to encrypt your private key, but it has nothing to do with actually accessing your ether in your wallet.
- Click the “Generate Wallet” button
- Download your Keystore / UTC file and save it somewhere safe. I leave it on my airgapped computer since no one can hack that.
- Read the warning, and click “I understand. Continue”
- Print out your paper wallet, or carefully hand write your private key on a piece of paper. I don’t have a printer hooked up to my airgapped computer so I could take a photo of it with my phone and print it that way, but typically I just write it by hand. Write it a few times just in case ink fades or you write it incorrectly. I also just save a screenshot of the paper wallet on my airgapped computer since no one can hack it via the internet anyway.
- Copy and paste your public address into a text document to move back to your primary, online computer.
- Search your address on http://etherscan.io and bookmark this page. You can view your balance anytime using this page.
- Send a small amount of Ether from an exchange or a different wallet to your new offline wallet.
- On your offline/air gapped computer, unlock your wallet via the private key your printed out, or by using the Keystore file. Make sure this matches the bookmark you have on the online computer. This is to make sure you can unlock your wallet before you transfer large funds to it.