Bitcoin wallets come in various shapes and sizes, from free paper wallets to three figure hardware wallets, but one type of wallet that is not discussed readily is a time locked Bitcoin wallet. As the name suggests, a time locked Bitcoin wallet is one whose funds cannot be accessed until a predetermined date, ensuring that the temptation to sell is removed from the equation.
But how do you time lock Bitcoin, and what are the pros and cons? Our quick guide offers you an introduction to this rarely discussed topic so you can see if it’s right for you.
What is a Time Locked Bitcoin Wallet?
A time locked Bitcoin wallet is a software (web) wallet that is locked upon creation and is programmed with a date on which it can be reopened. Funds cannot be accessed by anyone, even a third party, before the predetermined date.
How Do You Set up a Time Locked Bitcoin Wallet?
Setting up a time locked wallet is just as easy as setting up a regular cryptocurrency wallet, and can be done through a number of free services, with one of the most popular being coinb.in. There is an excellent guide to setting up the wallet here, but essentially the process involves feeding the public key of your chosen Bitcoin address and your chosen unlocking date and time (or Bitcoin block height) into the system and pulling the metaphorical lever. Voila – you’ve just time locked your Bitcoin wallet!
Why Create a Time Locked Wallet?
There are numerous reasons why someone would want to time lock Bitcoin. Time locked wallets are safer than regular cryptocurrency wallets because no one, not even hackers, can remove the coins before the set date or block height. This means that those who have faith in Bitcoin’s long term prospects can lock their coins up for a long period without having to worry about them being stolen.
Time locked wallets are also a good idea for those who want to keep their Bitcoin for a certain amount of time but don’t trust themselves not to sell early. Putting funds in a time locked wallet ensures that the devil doesn’t make work for your idle thumbs and you stick to your convictions.
Is a Time Locked Wallet Right for Me?
This is not an easy question to answer as there are lots of variables involved. Some may see a time lock as a way of nullifying their own itchy fingers, but it introduces the possibility of your coins being locked away while Bitcoin goes on one of its famous monster rallies to a point where cashing out is a sensible option, and one you can’t take.
Time locked Bitcoin wallets aren’t really practical in the short term and are far more suited to a 5+ year plan. Locking a small bit of Bitcoin away for five or even ten years is a better option than locking up lots for a short time – you won’t miss that small bit right now, but it might be worth a fortune on unlocking day.
Some have created time locked cryptocurrency wallets for their children that unlock on their 18th birthday, which is a nice touch and has a similar principle.
Time Locked Wallets Are a Nice Novelty But Nothing More
Time locked Bitcoin wallets should be looked at as a novelty rather than a means of protecting your Bitcoin from yourself or hackers. The risk of missing out on a Bitcoin bull run is too great in the short term, and you’d be better off spending some money on an impulse control course.
If you do want to time lock Bitcoin, only commit a small amount to it and set the date to far enough in the future that you can lock it up and forget about it, rather than spending a year or two analysing the price to see what it is worth.
On the plus side, setting up a time locked Bitcoin wallet is an easy process, so if you do decide to go ahead you won’t be hampered by technical complications.