- Change theme
How to Store Cryptocurrency
Many newcomers and enthusiasts wonder how and where to keep their cryptoassets securely and conveniently.
10:27 31 July 2023
Many newcomers and enthusiasts wonder how and where to keep their cryptoassets securely and conveniently. We will tell you where cryptocurrency is stored and give some useful tips on how to keep it as safe as possible.
But before we continue, we would like to recommend a great site where you can not only store cryptocurrency, but also buy it —platform for cryptocurrency Wiex.io. The company's wallets allow you to safely store, transfer and receive various assets.
Why Does Crypto Need Storage?
Before we dive into how to keep cryptocurrencies safe and define the best ways to keep crypto safe, let's first determine what these currencies are. They are digital tokens that can be exchanged through encrypted transactions that take place on decentralized networks – “blockchains”.
These transactions are made using numbers – each cryptocurrency has different digits. These numbers are also called “addresses”. Each of these addresses also has a second private key that must be kept absolutely secret, since it is used to make financial procedures.
Let's say Bob wants to send BTC to his friend Dillan. To do so, he must use his private key to sign messages with transaction details. A message is then sent to the blockchain containing a record of the BTC address from which Bob originally received coins, the specific amount of currency, and Dillan's public address.
Most cases of theft occur when attackers gain access to private keys through various manipulations. This can include the use of various phishing links or even social engineering.
Cryptocurrency security is also important because all actions performed on the blockchain network are irreversible. It is all about maximum decentralization and minimal external regulation, so neither banks nor the government can help you if assets are stolen.
Where to Store Crypto?
We've covered the terminology. Now it's time to talk about how to store assets safely. Here are the options.
Exchanges
The easiest way to store cryptocurrency is to use special exchanges. When you create an account on one or another stock, you get your own wallet. In it, you can store all coins traded on the site. Among the advantages can be distinguished access to a huge number of coins, but there is a serious disadvantage as well.
The safety.
The fact is, no major trading platform is safe from thieves these days. Hacks happen on a regular basis and continue to grow. For example, in 2022, attackers stole approximately $570 million from Binance. Or take the PolyNetwork hack that happened a year earlier – the exchange lost an estimated $610 million.
Hot Wallets
A hot wallet (custodial) is a remote purse. It most often comes in the form of an application installed on a PC or mobile device. However, there are also browser-based versions.
Some benefits of using these purses are:
- If there is an Internet, you can connect from almost anywhere;
- Transactions do not require unnecessary manipulation;
- Both mono-currency and multi-currency wallets are available;
- Broad functionality.
But there are some drawbacks as well:
- Vulnerability to fraudsters compared to other types of wallets;
- Dependence on the quality of the site owner's servers and applications.
Still, the popularity of these purses is justified. They are usually characterized by intuitive UI that make it easy to transfer and dispose of assets.
An example of a good purse of this type is the aforementioned Wiex. This is the kind of wallet that not only uses advanced protocols to protect customer data, but also has a responsive UI that makes it as easy as possible to work with. If you want to know better how to keep your crypto safe, you can check the information presented on this site.
Cold Wallets
A cold wallet is a physical device that does not have a consistent connection to the network. They do have impeccable level of security – hacking them is very difficult. But since it is a physical wallet, all the security for the currency is on the holder of the wallet.
Cold pursues (or non-custodial) are also more difficult to use than hot wallets because they require special software to be downloaded from the manufacturer to interact with the assets. In addition, some hardware wallets can cost quite a bit of money (from a few hundred US dollars to a few thousand US dollars).
How to Choose the Best Storage to Keep Crypto Safe?
Here are four key factors to consider when choosing a way to store cryptocurrency:
- Security
- Convenience
- Compatibility
- Control options
Let's analyse each of these in more detail.
Security
Security is perhaps the most important aspect when choosing a method of preserving.
If you are considering using a custodial pouch, you should thoroughly check the reputation and reliability of the company you are entrusting with your valuables. But if you don't trust people very much, that's fine too. It's your choice. In that case, a non-custodial wallet will help you to have absolute control over your assets.
What else can be done?
You can do some analysis of what is happening in the market in general. When it comes to coin management and analysis, background knowledge is essential. If you want to store your assets on an exchange, try to find out how their support works and what kind of verification procedures they make their customers go through. It will also be a good idea to study forums to understand how people talk about this or that service. But take all the received information with a grain of salt.
Convenience
If security is the most important aspect, convenience is the most ambiguous aspect on this list. Everyone may have their own idea of the ideal place to hold money. But if we judge objectively, custodials are more convenient.
The fact is that they are really simple. All you have to do is remember your username and password, and your account is always at your disposal. If you use this kind of wallet for storage, make sure you have two-factor authentication enabled.
Compatibility
It's mind-boggling how many tokens there are. Before choosing a wallet, make sure it supports the tokens you own or trade.
Control Options
Last but not least is the aspect of control. Do you want full control over your funds? Then look at hardware and software wallets, not the exchange. Here, private keys are stored only with you, not with some third-party service.
Holding assets is a very important aspect. You can use an exchange, custodial or non-custodial method for it. We hope that the tips you got from this article on how to store crypto safely will be helpful.