In this episode of "Down the Rabbit Hole" I answer the question that
you didn't ask. And for today's question we're talking about
key management and hardware wallets. What if I can't afford a hardware wallet?
What if I can't get one delivered? What if the amount of money I'm storing is
not enough for hardware wallet? What should I use instead? and that's the
question I want to answer today because it's a complicated question and not
everyone can afford or get access to a hardware wallet. So in terms of security
if you cannot afford a hardware wallet your next best option
is your mobile smartphone device. Your mobile device
most likely has a secure element, most modern mobile devices have a secure
element, and a secure element is a special security chip that is used to
store parts of the phone storage in such a way
that they cannot be extracted unless by the authorized program. That provides
isolation within the operating system. More broadly, mobile device operating
systems are much more buttoned-down than your average desktop operating system
especially you know your average Windows machine that has all kinds of junk
installed on it. A good clean installation on a mobile device with an
operating system that is up-to-date that is keeping up with the manufacturer
software updates in order to fix vulnerabilities is likely the most
secure device you own. It also has very strong authentication in the form of
pins, passphrases, fingerprints, bio-metrics etc. I always recommend using a bio-metric
and a pin -- not only a pin. And if your operating system doesn't allow that then
use a pin and it's ok if people think you're crazy when you're entering a 16
digit PIN. And then once you have a properly setup mobile
operating system, you can then install a reliable and powerful mobile wallet
which is a software application. You want that wallet to be BIP 39 compatible,
meaning that it uses a mnemonic phrase you own and control the keys by backing
up that mnemonic phrase. Of course you want to make a backup of that mnemonic
phrase and you also want to find out if it's using a standard derivation path
the best ones do. And you also want preferably a mobile wallet that also has
some smart features around privacy as well as some smart features around fee
management to manage transaction fees so you can do things like bump a fee using
replace-by-fee or child-pays-for-parent or you can manually adjust the
fees depending on how urgent a transaction appears to you. These are all
criteria that you might use to download the right mobile wallet.
They're all free, I wish some of them would charge the subscription for
support but they don't. And you can do that even on mobile devices that are 2
or 3 generations behind the latest -- it doesn't have to be an iPhone 11 Pro max
it doesn't have to be a Google pixel 4 it could be or Samson 10 it could be an
iPhone 7 or 8 it could be and even a Nexus 5. You can always go a few
generations back. Finally if you don't have a mobile device or if for some
reason you want to run a desktop application again it's better than
custodial but you have to be very very careful. Desktop operating systems are
much much less secure. My favorite desktop wallet is Electrum which I
use because of its very capable features and multi-platform support and
I've used it for a long time but I use it with a hardware wallet for the keys.
I do not store keys on a desktop device, ever. I don't trust them. On my
mobile wallet, I also keep a small amount as petty cash similar to what I would
keep in my actual leather wallet in my back pocket. So think of this as a tiered
solution. If you can't afford a hardware wallet use a mobile device. If you can
afford a hardware wallet, still use a mobile device so that you can have a
smaller value hot wallet that you use for day-to-day small transactions, maybe
a lightning wallet as well on your mobile device so you can do fast
transactions but don't store too much money on that mobile device if you have
a hardware wallet .And of course don't forget backup both of those! If you enjoyed
this video please subscribe, like, and share. All my work is shared for free so
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Thank you!