this post was submitted on 31 Jan 2024
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Privacy
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A hardware wallet is a great option, so is cold storage which you can do with a cheap $50 laptop. Most important is keeping backups. Think about how you will access your coins when your laptop or hardware wallet dies. Think about ways to prevent loss due to natural disaster. Multi-sig and shamirs secret sharing scheme are two ways to store coins in such a way that you won't lose them if your house burns down without having to trust a single party to custody them.
Is it enough to keep 12 words safe? Is there any other way to backup? Not sure what you meant with multi-sig and shamirs
Yes, if you have your 12-word seed, that's all you need.
Note: If you have a self-custody Bitcoin lightning wallet, you also need to backup your wallet "state". You also need to let your wallet access the internet every once and a while to monitor channel states to prevent theft of funds by somebody closing a channel and broadcasting an old state. Lightning is not designed for long-term storage, so don't use it for that purpose. Every wallet handles backup differently. Phoenix makes this automatic, it's awesome. Or you can just consider your lightning wallet your everyday spending money, not keep big amounts in it, not worry about backing it up. That's what I do. I figure the $25 I have on my phone is the least of my concerns if my house burns down.
Multi-sig is a type of wallet where in order to spend money from it, multiple other wallets need to sign off on the transaction. These wallets can be your friends/family, your bank, or other trusted custodian. You can set a threshold: 2 of 3 wallets, all wallets (bad idea! You lose all your funds if you lose a single wallet). It's a great way to custody funds long-term safely while eliminating single points of failure.
Shamir's secret sharing scheme can split your seed phrase into multiple parts. You can give those parts to other people, the key can't be re-assembled without the requisite number of parts (threshold) which is set by you. If somebody's part gets lost or stolen, no problem, nobody can do anything unless they have enough parts.
Thank you a lot for detailed answer