HODL wallets - savings - central bank
This is your “central bank,” the one that has most of your savings, your treasure, the “fattest” part of your money, which you are not going to move for a long time, which stays there waiting for the moment when you really need it.
These wallets are usually almost never connected to the online world. Online wallets are always exposed to phishing attacks, malware, key theft, device hacking. People lose their BTC because they lose control over their devices, NOT because BTC wallets are not secure. Almost all wallets are secure and offer more or less advanced security options. But the weak point is in the user who does not perform the security steps.
Here you only deposit BTC that you think you won't move, for a long time. But don't deposit here directly from income sources (exchanges, ATMs, sales, etc.). You can very easily use XPUB keys that are "read only", you can't spend them from there.
Here, on HODL, they come (only) after having done a good coin control and "cleaning" at the "cache level". We will talk about this cleaning in another dedicated guide, which is called "mixing/coinjoin with wasabi/samourai".
When you create a new wallet, always save them in your Keepass database or any secure method you want:
Seed words (12 or 24)
XPUB/ZPUB (this is the master public key from which you can generate new deposit addresses, using any wallet app that supports that feature)
The first 5-10 addresses (good to have on hand to verify recovery)
Wallet creation date (sometimes this information is good in recovery)
Label, any other information you want (size of utxo, names, purpose use)
To "read" an XPUB/ZPUB, you can use: Electum, Sparrow, Bluewallet, Sentinel.
HODL Recommendations (Level 1):
Use multiple wallets, with multiple utxos. Don't keep a single wallet with one giant Utxo. That's stupid. It's also a method to protect against the so-called "$5 Key Attack". If one wallet gets compromised, the others might stay safe so you're not losing everything in one go.
For each of these wallets, set your UTXO amount levels: one for high amounts, one for medium amounts, one for smaller amounts.
We consider this as a scenario (it is up to you how to set your own levels):
high = profit greater than 0.1 BTC
medium = utxo between 0.01BTC and 0.1BTC
small = utxo less than 0.01BTC
So in this case, let's say we have 3 wallets (each with a different set of seeds) and each with specific amounts of UTXO. You can resize as you like, important is that you will use multiple wallets for different amounts. Later, these wallets will be stored in different places.
These wallets will be just for holding your stash!
Consider also creating a dedicated wallet with small-medium UTXOs in case you need to open lightning channels later. You could use it with multiple UTXOs with different amounts between 1M sats and 10M sats. This way, you won’t have to use your long-term holding stash with larger utxos. Calculate your future spending possibilities, which will be over Lightning Network (LN).
Don't keep giant Utxos in a single BTC address in a wallet. That will be a single point of attack and failure and if you lose everything it will be a disaster. Always spread your stash across multiple locations.
Move to these Utxo-only wallets from your cache wallets, where you already have good control of coins.
If a wallet will, in time, have a lot of utxos (like more than 100), it is better to start a new one. Usually, when a wallet has too many utxos that loading them into an application will make it very slow and difficult to manage. It costs you nothing to create a new one and start over with a new set of UTXOs.
Never pay directly from these HODL wallets! Always try to move a specific UTXO to your cache wallet first and from there arrange the payment (directly on-chain or via LN).
I personally keep a copy (I have many) of every wallet information (seeds, XPUB, other useful info) in a password manager like Keepass. Offline, secured, encrypted on a USB stick. Just to have it handy when really needed. Yes, some will say it's not secure. You are welcome to try it to break it and see yourself in 150 years. Yes, this is not the only copy I have. I also split all the information into pieces and saved in different locations. Just in case... but these HODL wallets I almost never open, I just use their XPUB to deposit. So I barely need that encrypted USB to open it.
You always have to think ahead, how much you will start spending from one UTXO. So always prepare many different utxos with many amounts.
Examples:
Want to spend from a holding wallet to open a small LN channel, use a 1M UTXO
You want to buy a 0.0155 BTC and then use a 0.02 UTXO or if you don't have one like that, use a 0.1BTC and keep the change.
But always try to spend all the utxo if possible. Please note: it is best to use LN for spending. There is no limit of amount to send to LN, just that you need enough liquidity in your LN channels.
So remember: in these "vault" wallets, you just deposit BTC. Don't use them as your regular day-to-day wallets! You put them somewhere safe and "forget" to open them. As I said before, you don't need to open them to just deposit the new bitcoin into the new UTXO, use the "just deposit" method for that.
Examples of HODL portfolios:
Hardware wallets (HW). It is like a USB flash drive and inside it has a security chip that stores and controls your seed/keys. When using it, when making a tx, it asks for a password/PIN. The most popular ones are: ColdCard, Ledger, Trezor, KeepKey, OpenDime. A complete list of HW here. These are the easiest to use wallets for people who don't want to worry much about security and are less technological, but don't want to leave this aspect in the hands of others.
Paper/steel wallets. These are wallets in which you write the keywords and keep this medium, whether paper or steel, in a safe place, with copies if possible, better.
Steganography – It is an advanced method of hiding your keys inside an image or document file. It relies on an algorithm to insert additional bits into a file and protect it with a password. This can be done with several applications and the simplest and open source one is OpenStego.
Here is an example, this photo of some cute cats, it contains 1BTC, inside the file the keys to a $BTC wallet are inserted
I can send this photo to anyone (no digital editing/compression required) anywhere in the world, without anyone knowing that this photo contains 1BTC. Or I can even have it as a desktop background or in a digital photo frame box. In plain sight! But always with copies!
Shamir's Secret Sharing. It's a method to split the seed into parts. More details here . Also, we now have a nice tool to help us encrypt that Shamir Secret Sharing: it's called Shush .
TailsOS – It is a simple version of Linux, installed on a bootable USB stick. You can also use it as your own emergency OS and use any other wallet. If your PC is infected or you are not sure about its “cleanliness” or you are simply using another PC that is not yours and you do not want to leave “traces” on your BTC (public PC or other people), then just plug this USB and boot TailOS as if it were your PC. Of course, you have to know how to boot a PC with a USB and NOT with your hard drive OS. A presentation about TailOS here.
Please note: This OS is read-only, so nothing is saved on the device. On this OS device you can also set up a persistent, hidden partition where you can save data and/or store copies of your wallets. This partition is encrypted with a password you choose at the time of its creation. Here is a guide on how to do this.
TailsOS also comes with the Electrum wallet and KeePass app already installed. So you are ready to use them as emergency access to your bitcoins. You can use this “mobile OS” anytime, anywhere, safely and cleanly without relying on any other operating system on any PC.
USB stick. If so, a simple USB stick, but BE CAREFUL, encrypted. If you don’t want to spend money on expensive HW, you can use any USB stick (with copies!) where you can store your data on your BTC wallets. There you can put your kdbx file from the password manager (KeePass), or just files with your wallets/data copies. I remind you: DO NOT LEAVE this stick open, always keep it encrypted. Below is an example of how to encrypt a USB stick with Windows, and how to encrypt a USB stick with Ubuntu Linux.
Madness in plain sight! What if I told you that I have on 3 websites on the Internet, in plain sight of everyone, in some texts, like this page for example, where inside the text, I have inserted 12 words of a seed? Because that's it. You can simply use the 12 English words, which are from the linguistic dictionary, to write a beautiful text, a love letter, a story, a literary work, a blog, etc. and only YOU know the position and order of these words. Let's suppose that you already have a HW, but you lost it. Well, if you already have the recovery seed words in a text posted somewhere online, just access this text and extract it. You do the same if you want to send BTC to someone, but you don't want anyone to know about it, absolutely no one. You just send them this text as an email. No one will notice that it may contain the keys. Even if you think about it, they have many years of trying until they can find the order...
Phrase within a phrase. Another little crazy thing, you can use for example a phrase from your text “Madness in plain sight” and put it in PublicNote. This algorithm (which is open source and you can turn it off if you want) makes an encryption of this text into another text. An example: I put in PublicNote the text “this is a test”, which turns it into “this is my 12 word password”. So again the text is hidden in plain sight, but this time a bit more “hidden”. They also have a mobile version.
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