2) Having a paper wallet (encrypted with BIP38). The problem: You can easily lose a piece of paper.
Well, you could also make multiple copies of that piece of paper. Unlike cash, your bitcoins can be in multiple places at once, after all. Imagine losing your wallet on the subway, with all your cash in it, but wait! You have a backup at home! And a potential thief who finds the wallet can't access your cash without a password anyways.
But paper wallets, similarly to hardware wallets, are very recognizable objects (and it will be increasingly recognizable overtime),
Not necessarily. Look at how small they can be, such as the paper discs inside casascius coins. If it fits on that, can't you write it on the page of a book on your shelf? Books aren't immediately recognizable as money. What about a curtain rod? There's nothing stopping me from turning that into a wallet. Just stick some numbers in there where they can't be seen.
A lot of people make their paper wallets look like money because that's fun to do. It doesn't have to be that way.
Good point. You could just put your paper wallet in the middle of a big fat book and it would be hidden pretty well. Im not sure about anything else tho. Any hardware wallets are still a problem and could be recognized during scans on airports.
If eventually the governments become extremely paranoid about Bitcoin, they may start looking for these on every border, so have that in mind. A generic USB or any other generic storage device is always better than a HW in this sense. The paper wallet hidden inside a book idea is also good (unless they start checking books too...)
All things considered, hardware wallets suck unless you are sure that nobody is going to find it, and nothing can guarantee that, which is why I advise against them, among other things such as having to trust that they are legit.
Remember also that private keys can be encoded in many creative ways. For example, you can write some notes on the side of a page in a textbook, and then use that text as a private key. Chinese customs looks at the notes, and sees scholarly etchings, not a bitcoin key. When in reality you could have your savings stored in those notes.
True, but if you are a Bitcoin Core user and you have all of your private keys on a wallet.dat file, you can't do that. You are going to need a device to store your wallet.dat file, so an USB seems like the best way to go. You could also encrypt your entire laptop, but beware, if you lose the password, it's game over. I lost a password for some encrypted drives with veracrypt, and I can't no longer access them.
You could just send your wallet.dat file to yourself in an email temporarily while you cross borders, just encrypt it and hide it well, it should be ok as a temporary measure.
I just don't trust BIP38 enough to have all of my BTC on there, so I need ways to keep wallet.dat safe.
- I have seen Veracrypt being unable to restore encrypted files several times (of course using the correct password). I wouldn't trust it with my money. I never had problems with GPG, so its my first choice.
- I use email as an additional backup for my double encrypted wallet.dat files. Crossing borders without a hassle is a nice side effect.