Kataryna Habeliia September 10, 2020
Table of Contents [hide]
- 1 4 Ways to Safely Store Cryptocurrency.
- 1.1 Online wallets
- 1.2 Crypto exchange
- 1.3 Hardware wallet
- 1.4 Local wallet
4 Ways to Safely Store Cryptocurrency.
It is not enough to buy bitcoin or altcoins, it is important not to lose them. There are several options on how you can safely store cryptocurrency.
After buying a cryptocurrency, every user who is just starting his journey in the field of digital money, the question arises of how to store it. There is no regulation in the blockchain industry, so you need to be especially careful about this topic. Everyone is personally responsible for their coins, if they are lost in 90% of cases, there will be no one to ask. However, there are several ways to safely store your cryptocurrency.
One of the easiest ways to keep cryptocurrency is to store it in an online wallet. This option is not the safest, since the user trusts his funds to a third-party service, but this disadvantage is partially offset by simplicity and convenience.
Online wallets are divided into hybrid and traditional. The first method implies separate storage of keys using multisignature, the second — private keys are stored on the service, and only a backup copy is available to the user.
The main advantage of hybrid wallets is that developers do not have full access to the user’s coins. Transfer from such storage will take place only with the participation of the client and the company. It is more secure, but if you lose your secret phrase, you will not be able to regain access to your funds.
Traditional online wallets are easier to use but less secure. Hackers can steal funds by hacking into an account or by creating a phishing page.
You need to be extremely careful not to store a large amount of cryptocurrency in your online wallet. One of the most popular Blockchain.com services. Its counterpart, which is considered more secure, is BitGo. Each transaction in this wallet requires two signatures, and the company does not have full access to clients’ coins.
An even easier way to store cryptocurrency is on an exchange. When registering on the site, each user automatically receives a wallet. It supports all coins that are listed on the exchange, they always have instant access.
The advantage of this option is the ability to easily return access to your account and your cryptocurrency. However, exchanges have serious security concerns. None of the largest marketplaces is completely protected from hacks, and they all have at least once lost customer funds as a result of hacker attacks.
Also, the platform may suddenly go offline for an indefinite period due to technical problems. At this moment, clients lose access to their cryptocurrency during work. In addition, you should always be extremely careful when choosing an exchange, as you can get caught by scammers.
Crypto exchanges are not suitable for storing large amounts of cryptocurrency. It is better to deposit exactly the amount of digital coins you need for trading. After that, it is advisable to withdraw the surplus to third-party wallets, mainly to hardware.
The safest way to store cryptocurrency is a hardware wallet. This device looks like a USB flash drive. They can also be compromised, but to do this, hackers need to gain physical access to the storage. If you keep it in a safe place, the risk will be minimized. However, one of the downsides to hardware wallets is the possibility of losing it or breaking it.
In 2019, a hacking of Binance, the largest exchange by trading volume, doubled the sales of Ledger devices. However, they also find vulnerabilities or errors in work. And in December last year, experts of the Kraken exchange found out that the KeepKey wallet can be hacked in 15 minutes, spending only $ 75 on it.
A more complex but versatile way to store funds is a local wallet. These are applications for PCs or mobile devices, browser extensions. Such a wallet can be downloaded from the official website of the project.
The mobile option is suitable for those who need constant access to their coins for transactions. The cryptocurrency will not be stored on the smartphone, it can be accessed only if the Internet is available. Even if the device is lost, digital money can be returned.
It makes sense to store only coins running on the Proof of Stake algorithm on a PC. It will be necessary to completely download the blockchain of the selected asset, its weight can be tens or hundreds of GB. In the case of PoS, as long as there is some amount in the wallet and the computer is turned on, the user is credited with a certain amount of digital money on the balance.
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