Setting up cold storage for my parents
"We don’t want to buy Bitcoin on our own. We will wait until we’re there with you."
— My parents
Welcome to the latest issue of the Bitcoin For Families newsletter. This issue covers the cold storage setup I’ve planned for my parents.
Setting up cold storage for my parents
My parents have finally decided to buy some bitcoin.
They’ve heard me talking about the demise of the US dollar and the Euro but I doubt that they have decided to buy some bitcoin because of that.
They are saving in bitcoin because they know that I save in bitcoin and they think it is prudent to put a very small share of their net worth into the same asset that I use for my savings. And I’m ok with that.
My parents use laptops and are comfortable with technology at a user level but they are far away from feeling comfortable doing something totally new.
Therefore, I was not surprised when they said that they would like to buy some bitcoin but, that they didn’t want to do it on their own, that they would wait instead until they are with me so that I can hold their hand throughout the process.
They will be visiting the beautiful Pacific Northwest in a few weeks and in preparation for their visit I have ordered everything that they’ll need to securely hold some bitcoin:
- Coldcard Mk 4
- Data only USB cable
- 16 GB microSD card x 2
- microSD reader
- Seed plate
- Plus the Sparrow wallet to be installed in their Macbook Air
I will be using my own seed plate puncher so no need to buy one for them.
The focus is on simplicity:
- They need to feel very comfortable with the requirements of self custody their money, buying more bitcoin and sending it to the Coldcard.
- They need to feel capable of sending bitcoin to another wallet if they need to.
Coldcard setup
- The Coldcard will be setup with a 12 words seed. 24 words is overwhelming and not necessary.
- The 12 words will unlock wallet #1 with a small amount of bitcoin.
- A simple word added as a passphrase will unlock wallet #2 with the rest of their bitcoin.
The passphrase will give them peace of mind. They will know that even if somebody steals their seed plate, they won’t lose their money. This would include:
- If a bad actor inspects or confiscates their seed plate while they are traveling back to Spain.
- If they need to disclose the seed under duress.
They can share this word with my sister and I without sharing the seed and know that if they pass away, only we will be able to access the funds once we get hold of the seed plate.
The Coldcard will have two pins: the real one and a pin setup to brick the device. The brick pin will be taped to the back of the device so that if someone steals the device, they will surely try that pin and render the Coldcard useless. My parents will know to NEVER use the pin taped on the back.
Seed backup
The Coldcard will be backed up to one of the microSD cards. The other one will be used for air gapped transactions.
The Coldcard, seed plate and back up microSD card will be stored together in the same place where they keep their passports.
Buying more Bitcoin
I’ll import the details of both wallets into the Sparrow application and show them how to generate a new bitcoin addresses if they buy more bitcoin and need to transfer it from the exchange and into cold storage.
They will buy KYC bitcoin. Trying to get them to buy non-KYC bitcoin at Robosats is just too much.
Selling Bitcoin
I will show them how to approve an air gapped transaction. I will also write down the steps in a document saved on their computer and record a video while executing the steps.
An air gapped transaction is more complex than receiving bitcoin but hopefully they won’t be selling bitcoin anytime soon so they just need to feel capable of doing it if needed.
Hot wallet
While they are here, I will also install the Phoenix lightning wallet in their phones so that we can settle bills easily back and forth once they’re back in Europe.
I can remotely do this with my sister as well so that the whole family can start sending bitcoin back and forth to each other.
Additional references
BTC Sessions has a fantastic tutorial on the Coldcard. It is a long video but very comprehensive.
And conveniently, Guy Swann just released an episode on Basics of key management (the trick about taping the brick pin to the back of the Coldcard is from this episode 😁).
And that’s it. Please let me know what you think about this setup as well as what you would do different in the comment sections below.
Notable notes
Recommendations
Ben Goggin
Ben is the deputy tech editor and NBC News. He has 9.4 million followers on Twitter and yesterday (May 26th) he joined Nostr to find out what is the deal with this social network that Jack Dorsey keeps talking about.
Within a few hours of joining he had already discovered the power of being able to not only Like but actually reward other people with money (zaps) for notes they publish that you find valuable.
Follow him on [here](Ben Goggin) to get a fresh perspective from somebody who is not a bitcoiner on the first decentralized social network: Nostr.
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