Can Governments Or Corporations Steal Your Bitcoin?

Bitcoin is the most censorship-resistant form of money ever created... if used correctly. 

The ugly answer is, yes. Your Bitcoin can be seized by scammers, governments, corporations, and others if you fail to store your Bitcoin properly. 

However, if you store your Bitcoin properly it is impossible for any government on Earth to seize your digital assets. 

Christians ought to understand the risks associated with storing crypto on an exchange, with a third-party service, or on a "hot-wallet." The only guaranteed way to protect your crypto assets is called "cold storage."

Learning about Bitcoin security is a part of everyone's crypto journey. We want to help Crypto Christians learn about best practices and slowly increase your security over time. 

Let's break down the levels of crypto security...

Exchanges And Third-Party Services:

Buying and holding Bitcoin or other cryptocurrencies on exchanges (such as Kraken, CoinBase, or FTX) or third-party services (such as Strike, Swan, or Blockfi) is the least secure form of Bitcoin storage. 

To be clear - Your Bitcoin is most likely not in any immediate danger of being held on these platforms. Many members of the Crypto Christian buy Bitcoin on these services and will use them as temporary storage. 

So what are the threats surrounding holding Bitcoin or Crypto on exchanges? 

• Bankruptcy: Coinbase recently released a report warning users that if the company ever went bankrupt, customers could lose their crypto (source). An exchange like Coinbase going bankrupt is highly unlikely.

• Seizure: If exchanges or third-party services are faced with government demands to freeze accounts or turn over funds to a government... they will almost certainly give in to their demands. In fact, Jesse Powell the CEO of Kraken, a crypto exchange, has outright stated the company would comply with demands and encouraged users to remove their digital assets from his own platform!

  

• Scammers: Hackers desperately want to hack the exchanges and steal people's crypto. Even worse, scammers have even created their own exchanges and stolen Bitcoin from users. Do NOT use an exchange or third-party service that seems sketchy.

• Supply Crunch: Lastly, exchanges could exaggerate how much crypto inventory they have on hand. What this means is exchanges could theoretically lie or mislead consumers about how much Bitcoin they have on hand and get caught someday -- much like a traditional "bank run."

Hot Wallets: 

The next level of security is moving your Bitcoin and crypto from an exchange to a "hot wallet." A hot wallet is simply a Bitcoin or crypto wallet that is connected to the internet. 

Examples of Hot Wallets: Blue Wallet, Electrum, MetaMask, Exodus.

When you create a hot wallet, you will be required to create a "Seed Phrase" or "Mnemonic Phrase " of 12 or 24 words as a backup code to access your Bitcoin if you ever lost your password. These are called your, "Private keys". 

By creating a hot wallet, you'll dramatically increase the level of security for your Bitcoin or crypto. 

However, when using a hot wallet like MetaMask or others, do not start connecting your wallet to a bunch of applications without doing your due diligence. Scammers love gaining access to hot wallets and cleaning out your account. Never interact with unknown users or addresses.

Cold Storage: 

By moving your "private keys" to a hardware device, not connected to the internet, you have achieved one of the greatest levels of crypto storage. 

Examples of cold storage: Ledger, Trezor, ColdCard

At this level, it is nearly impossible for a government, corporation, or thief to steal your Bitcoin. The only "threats" your crypto has left are... 

• A "$5 Wrench attack": The $5 wrench attack is simply a burglar entering your home, stealing your hardware device, and a sheet of paper containing your password and seed phrase. 
  
  
• Irresponsible handling (forgetting): Sadly, one of the most common reasons people lose their Bitcoin or crypto is they simply forgot their password, seed phrase, or lost a device. By moving your private keys to cold storage, you MUST assume responsibility for keeping your password, seed phrase, and devices safe. 
  
  
• Damage: Bad things happen to good people. It's a reality of life. Your house could burn down, a child could destroy your device and eat the piece of paper with your seed phrase on it... You must take actions to properly store and secure your hardware device and seed phrase. 

By storing your Bitcoin or crypto on a hardware device and protecting your private keys, you will have access to your crypto anywhere around the world at any time. No government or corporation can take it from you. 

But a $5 wrench attack, forgetting, or damage all seem like plausible scenarios... How do you guard against them? 

• Separate your hardware device, password, and seed phrase: By keeping these three items in different locations, you essentially render a "$5 wrench attack" useless. The thief will not know what to do with the items.
  
  The most important piece of the puzzle is keeping your Seed Phrase protected. If your hardware device was stolen or smashed, you can still recover your crypto with your Seed Phrase. 
  
• Proper Storage: Buy a safe. Buy a fireproof box. Put that fireproof box inside the safe and don't tell people where it's located. 
  
  
• "The First Rule of Bitcoin Storage is... Don't Talk About Your Bitcoin Storage!" - Tyler Durden, Fight Club: This one should be simple but, don't tell people your Bitcoin storage. Common criminals most likely won't recognize a Bitcoin hardware device... but your friends might know. 

If you take these steps, you have eliminated 99.99% of all opportunities any person, corporation or government has of stealing your Bitcoin. 

Believe it or not, there are even more steps you can take to make this 99.99999% secure such as Multi-Signature storage or moving your private keys to a node. But we'll get into those another time. 

If you have any questions about proper Bitcoin or crypto storage, please email contact@thecryptochristian.com and we would be happy to help!