You just purchased your first cryptocurrency and now you need to store it safely, so you can buy and sell it as you please, but what’s the best way to store your cryptocurrency? You’re in luck, because we’ve compiled the ultimate guide to storing your cryptocurrency safely. From hardware wallets like the Ledger Nano S or paper wallets like the Trezor or paper wallet generator, to software wallets that let you store cryptocurrency on your computer like Jaxx or Exodus, we will show you how to store safely, so you can keep access to your crypto wallets and prevent getting hacked.
Where do you keep your cryptocurrency?
Before you even think about buying or storing cryptocurrency, you should make sure that you’re storing it safely. That’s why we’ve put together our comprehensive guide on safe storage methods for cryptocurrency.
This guide covers all of your options from software wallets and paper wallets to hardware wallets and exchanges—plus a few more advanced methods, too. Read on for answers on everything from desktop and mobile crypto wallet apps, hardware wallets like Trezor or Ledger Nano S, as well as keeping crypto off of exchanges entirely by using a paper wallet—and more!
3 Ways To Keep Your Crypto Safe: Your private keys are stored in a digital wallet. This is what allows someone to send cryptocurrency between addresses. There are many different types of digital wallets, but they’re all relatively easy to use once you get used to them.
However, some wallets are better than others when it comes to security and privacy. If someone steals your private keys or guesses them, they can access your funds so be careful who you share them with.
Basic Knowledge on Crypto Wallets
You cannot own a cryptocurrency without possessing its private key. This is because it gives you access to your funds and allows you to carry out transactions through a specific crypto wallets address.
Storing your cryptocurrency on an exchange has always been risky since exchanges get hacked regularly, meaning that you could lose all of your funds in a heartbeat. To keep your assets safe from hackers, you should use a secure crypto wallet where your cryptocurrencies will be stored on blockchain technology instead of being held by an exchange for you.
It’s also important to know that there are two types of cryptocurrency wallets: hot wallets and cold storage wallets.
Hot wallets are connected to the internet while cold storage wallets aren’t. Cold storage wallets are considered safer than hot ones since they can only be accessed via a hardware device or software program which makes them nearly impossible to hack into.
Do Not Use an Exchange Account as a Storage Solution
Using an exchange account as a crypto wallets isn’t just bad for your security; it’s actually against most exchanges’ terms of service. If you are depositing funds into an exchange, you are technically doing so with that site, not a cryptocurrency wallet.
Any coins in that account should be considered at risk of being immediately sold off or liquidated by other users. Not only is using an exchange as a storage solution unsafe and at high risk for hacks—it’s also illegal in some jurisdictions.
There is no buyer protection when using exchanges as a crypto wallets, so use exchanges wisely: Use them only for trading and storing smaller amounts of value; otherwise, it’s time to move your coins onto a secure digital wallet.
Hardware vs Paper crypto wallets
A hardware wallet is more secure than a paper wallet. It’s a physical storage device for your cryptocurrency that acts as a USB drive. That means it’s always connected to your computer and can only be accessed when you’re logged in, which prevents you from getting attacked while browsing or using public Wi-Fi.
Keep in mind, though, that if someone steals your hardware wallet they have everything they need to steal all of your funds—so don’t let it get stolen! The best advice we can give you is: If you have any significant amount of cryptocurrency holdings, leave them on an exchange until they’re ready to be spent; then send them directly into cold storage and offload physical control of the device.
Hardware wallet (Trezor, Ledger)
Some of your coins will live on an exchange (hopefully one with two-factor authentication) but most of them should be kept in a hardware wallet. Most hardware wallets have apps that allow you to easily manage your keys and transactions.
This is by far my favorite type of cryptocurrency wallet since it allows me peace of mind knowing that even if my computer gets hacked, my coins are safe.
Some people prefer software wallets because they’re free and easy, but you don’t have control over security features like two-factor authentication or whether a hacker can access your private keys through malware on your computer.
What is hot wallet
If you’re storing your cryptocurrency on an exchange, you’re likely using a hot wallet. You can think of these as checking accounts for cryptocurrency. They allow for easy on-and-off access, but should be used with caution: Unlike a cold wallet, any coins stored in a hot wallet are vulnerable to theft from hackers or other cybercriminals.
Many exchanges provide users with two wallets—one for each type of currency they support—but if you plan on storing large amounts of cryptocurrency, it may be better to look into investing in a hardware wallet. (Here’s more information about hardware wallets.)
Online web wallet (Coinbase)
Online web wallets can be convenient and offer a high level of security for your cryptocurrency. By storing it online, you don’t have to worry about someone breaking into your home or getting a hold of your private keys. They are not as secure as offline storage but they do provide an excellent compromise between convenience and security.
A good example of a web wallet would be Coinbase, which is one of the most popular web-based wallets for both Bitcoin and Ethereum users (the same login applies). This is perhaps one of the easiest options if you want to store your currency online because all you need is an email address and password. It’s not just limited to Coinbase though, so feel free to compare other providers too—such as Trezor Wallet.
Offline web wallet (MEW)
Another way of storing your cryptocurrency is through an offline wallet, often referred to as a cold storage option. These are considered more secure than hot wallets because they aren’t connected to any network.
The only way you can access them is by plugging in a USB drive and opening your wallet with a set of private keys. A cold storage wallet also allows you easy access if you have paper copies of your keys.
Hardware wallets are also available, which give you offline storage and even allow you to connect with other devices in order to perform transactions seamlessly. Most hardware wallets work using two-factor authentication, ensuring that even if someone steals your physical device, they will still need your PIN or passphrase before making any withdrawals from it.
Mobile wallets (BreadWallet, Coinomi)
Mobile wallets are a great way to securely store your cryptocurrency. They’re convenient, easy-to-use, and simple for beginners. Mobile wallets are encrypted by default and don’t hold all of your coins at once (meaning you can’t buy a Lamborghini with them).
The biggest downside is that they expose your coins to hacking from anyone who gets their hands on your phone (and we all know how expensive those repairs can be). To protect yourself, use two-factor authentication and store most of your crypto in cold storage—or on another device not connected to any networks.
Desktop wallets (Jaxx)
Desktop wallets are installed on your computer and give you full control over your cryptocurrency. These are convenient because they can be used anywhere and offer strong security. The main downside is that if your computer is hacked or gets a virus, you could lose access to your coins.
Another risk with desktop crypto wallets is that if someone discovers your wallet password, they could send all of your coins to another address. To prevent loss, only use desktop wallets on a secure computer that has multiple antivirus programs installed.
It’s also a good idea not to store large amounts of cryptocurrency in desktop wallets; instead, store smaller amounts on desktop wallets for everyday use and keep larger amounts in secure offline storage.
Paper wallets (BitAddress)
A paper wallet is an offline (cold) storage method for cryptocurrencies. It allows you to generate a private key on a computer that has never touched the internet, printing it out and storing it somewhere safe. Then public key printed below it.
The paper wallet can then be stored in a lockbox or vault that’s not easily accessible, such as a safe deposit box at your bank. This means your cryptocurrency should be completely safe from hackers and thieves—even if your computer or device gets stolen or hacked! To receive cryptocurrency, all you need to do is enter in the public address of your paper wallet into any online cryptocurrency trading platform where you want to trade your currency.
Read: The History of Cryptocurrency | How Cryptocurrency Came into Real World
