Not Your Keys, Not Your Bitcoin
Setting up your first mobile Bitcoin wallet
by WizardofAus | Apr. 21st, 2020 | vol.1
If you’ve bought some bitcoin but you’ve never taken that next step of setting up your own Bitcoin wallet, then this is for you.
I’ve tried to keep it clear and simple, but please reach out with questions or suggestions on Twitter; and there are additional links for more help at the end too.
Learn how to setup a Bitcoin wallet so you can hold your own bitcoin – and avoid a visit from my friend, The Fuckup Fairy!
Storing your own Bitcoin is surprisingly easy, but it has some pitfalls which we’ll cover in this article. You’ve probably heard that there are many different types of wallets – mobile wallets, software wallets, hardware wallets, multi-sig wallets, custodial services, collaborative custody etc. It’s very easy to get bamboozled about where to start (analysis paralysis)!
However, there’s one type of wallet that is worse than ALL of these, one that should be avoided at all cost – and that’s Exchange wallets. If you hold Bitcoin in an Exchange Wallet, you should get them out of there as soon as possible.
Why
There are three important reasons to get your bitcoin off an Exchange and into your Bitcoin wallet:
1. Exchanges are hacker honeypots
Multiple bitcoin exchanges are hacked from the inside and the outside every single year, without exception and without fail. Some of them survive the hacks and some do not. When those bitcoin you bought are on the exchange, you bear this risk.
2. Exchanges may not have the bitcoin
Some exchanges don’t have all the bitcoin they sell – which is not a problem for them as long as a lot of people don’t try to withdraw it. But it becomes your problem if that is the case, and you’re the last one to the door. Remember Musical Chairs from birthday parties in school years?
3. Bitcoin is about self-sovereignty
The ethos of Bitcoin is not to need to trust others, and that’s why we have such a magnificent choice of wallets and devices for storing our bitcoin. Following this guide is about empowering you to safely hold your bitcoin, without regard for anyone else at all, ever!
Options
There are lots of Bitcoin wallets for both iOS and Android. I prefer wallets that are bitcoin-only, because the wallet software engineers are fully focused on the security of the wallet for Bitcoin. There’s a great list of options over at bitcoin-only.com, and since Blockstream Green is available on both iOS and Android, we’ll use that as our example.
Other wallets work in broadly the same way, so if you want to choose a different wallet, feel free!
Seeds, wallets, keys and addresses
There are four things in particular you’ll hear about regarding bitcoin wallets:
Seeds
Wallets
Keys
Addresses
They’re related to each other as shown, each Wallet has a Key – all managed by the software.
Bitcoin wallets have three jobs:
the creation of Seeds, wallets, keys and addresses
the storage and protection of wallets, keys and addresses
the use of wallets, keys and addresses for sending and receiving bitcoin
We’ll cover off each of them as we go along.
The Seed phrase is just a list of either 12 or 24 words; Green uses 24 words. This approach for wallets is a standard now, is called Hierarchical Deterministic wallets.
It is of supreme importance that you keep the Seed phrase safe and secure – we’ll get to that later! 😊
Doing it
Part 1 – Creating your wallet and sending your first tiny bitcoin transaction
Before we start
You’ll need these four things:
your mobile phone
some paper
a pen
some uninterrupted quiet time
Download and install
Head over to your phone’s App Store and download Blockstream Green.
Create your wallet
Open Green for the first time and you’ll get two options:
Create New Wallet OR Restore Green Wallet
We’re going to start by creating a new wallet, so select that for now.
Write down your seed phrase
Green now prompts you to write down your mnemonic on paper. Mnemonic is just another name for the seed phrase – and you’re already prepared with the pen and paper. Their advice NOT to store the seed phrase electronically is important and good advice.
Press <Continue>.
Grab your pen and paper and start writing these words down. Green presents them in blocks of six words. I recommend numbering the words as you write them, so that there’s no confusion about the sequence later. Write down all 24 words.
Validate your seed words
Green will now prompt you for specific words from the list you wrote down. This validates that you’ve written them down correctly.
Create a PIN
Your Green wallet has a PIN code just like your ATM card – it’s a sequence of 6 digits known only to you. Write this down along with your seed words.
Two-Factor authentication(2FA)
One of Green’s strengths is that you can use two-factor authentication. This means that there are two actions needed in order to send any bitcoin from your wallet. This 2FA method can be Email, SMS, a Phone Call, or Google Authenticator. 2FA can be added later by going to Settings.
Congratulations!
Take a bow. You’ve now setup your own bitcoin wallet. It was actually pretty easy, huh? Except for that thing about writing down the seed words, it is much like using any other mobile app. Alrighty, onwards!
Configuration for you
Two things you might want to change are the bitcoin denominations (from BTC to Sats), and the fiat currency, if you’re not in the default region (USD).
Click on settings, and change BTC to Sats, and the Reference Exchange Rate to your preferred currency and exchange. There are 100 million Sats in each bitcoin, in the same way there are 100 cents in the Euro, or 100 cents in the Dollar. Denominating your everyday transactions in whole Sats is easier for human brains than doing it in small fractions of 1 BTC.
Your first bitcoin address
Time to press the <Receive> button. This tells Green that you’re expecting to receive some bitcoin, and it generates a Bitcoin address. You can see there is a QR code, and a string of letters and digits underneath it – they are different representations of the same bitcoin address. This is the address that you’re going to send your first small Bitcoin transaction to.
Transferring bitcoin addresses
Bitcoin addresses are those big strings of upper and lower case letters and digits. And the case of those letters matters. One of the ways I make sure that my friend, The Fuckup Fairy, doesn’t come visiting and wave her magic Wand of Chaos, is to never write these down, or type them in manually. I always copy and paste.
If you need to copy and paste between devices, you can copy, then message and paste, to achieve that. See the <Share Address> button at the bottom? That supports this exact function, with lots of messaging support already built in!
Sending from your exchange
On your exchange, you’ll need to head over to the section called Withdraw – or similar. There you will need to enter two pieces of information:
the amount of bitcoin you’re sending
the Address you’re sending those precious Sats to
I suggest a small initial transaction like 100,000 Sats.
The bitcoin destination Address is the address from your Green wallet.
Finally, hit the <send> button on your Exchange, to send those Sats to your wallet.
Watching your first transaction
After a little while (usually a few minutes), you’ll see the transaction appear in your Green wallet. It will initially show as Received, but “Unconfirmed”. This means the Exchange has sent the transaction, and it’s waiting to be mined into a permanent bitcoin block. If you tap on the transaction, you can then <View in Explorer> to see extra information about it.
Now you just have to wait for the transaction to be confirmed. Good time to take a break 😊
Part 2 – Restoring your wallet and sending your remaining bitcoin
Delete your wallet
After you see your transaction has confirmed, you have actual ownership and control of your bitcoin. Well done!
Now we’re going to cover how the Restore Wallet function works, so that you experience zero stress if your phone is lost, stolen, broken, or you get a new one. This is about peace of mind, so don’t skip it!
Remember how you wrote down that seed phrase at the beginning? We’re going to need that, and we’ll learn why it’s so important to keep it in a safe and secure place.
The first step in this part is to delete the Green wallet app from your phone. Yep, you read that correctly. It’s not a typo, and you’re not going to lose your bitcoin either. Go on – delete the Green wallet app.
Restore your wallet
Start by re-installing the Green wallet app like you did in Part 1. Except this time, when you start it up, instead of <Create New Wallet>, you’re going to choose <Restore Green Wallet>.
Re-enter your seed words
To restore your wallet, enter in all of the seed words you carefully wrote down before. All of the wallet details, transactions, and addresses, are derived from that seed phrase. So when you recover your wallet, you are back to exactly where you were, with nothing lost. Seriously though, how cool is that!? This is very sophisticated cryptography.
Store your seed phrase safely
Now you have seen first hand how powerful your seed phrase is. Anyone who has it can restore your bitcoin wallet on another phone, and freely spend any bitcoin in it. So you want your seed phrase kept very safe in case you need it, and you also definitely don’t want it falling into the wrong hands. Keep it secure and keep it safe.
Send your remaining bitcoin
Now that you know how your wallet works, you can send any remaining bitcoin you have on exchanges to your bitcoin wallet. Only when the bitcoin you have bought have safely arrived in a wallet under your control, is it actually your bitcoin. Until then, it’s a hopeful “IOU” from an exchange you trusted with a bunch of your hard earned money.
Remember
Your keys, your bitcoin; not your keys, not your bitcoin.Keep your seed phrase safe – it is the key to your bitcoin kingdom.There’s no-one to call if you lose your wallet *and* you lose your seed phrase.If you lose access to your wallet and your seed phrase, your bitcoins are irretrievably lost.As you accumulate more bitcoin, and as it accumulates more value over time, level up your security.WizardofAus is a Bitcoiner with a passion for helping people learn about Bitcoin. He’s spent a long time working on complex tech, so he values keeping things simple and clear. The Fuckup Fairy is his long-time friend and nemesis; they have a healthy respect for each other.