How and where to store your cryptocurrencies safely?
As the transition from traditional stores of value move to their digital counterparts it’s logical the world is looking toward safe digital storage options. So once you’ve invested let’s look at the options for storing your cryptocurrency.
There are many different options for safe storage with different wallets catering for different coins or personal preference. Holding your cryptocurrencies on an exchange platform is also an option, but not advised. Holding coins on an exchange may be convenient– but it leaves your assets in the control of a third party which is rarely, if ever, advisable.
Below we’ll talk through some of the key factors to help you decide which wallet will work best for you.
What to store?
Cryptocurrencies aren’t like traditional physical ‘fiat’ currencies made up of notes or coins to represent their value. They do however need to be stored in the digital equivalent of a wallet or safe, depending on your preference.
To access your crypto funds you’ll need ‘private keys’ – look at these like your house keys or the password to your online banking. You need to keep your keys safe to protect your assets. If you generate these keys in an unsafe environment, you can risk the security of your private keys and the safety.
Your bank safeguards your funds with their own security systems, similarly, cryptocurrencies are protected with advanced cryptography. However you need to take great care not to lose your private keys, as without them your crypto investment will become completely inaccessible.
Now hopefully you should know what you are safeguarding.
Where to store?
So, assuming you’re looking for a safe place to store your crypto assets and you don’t fancy taking your chances with a crypto exchange you’ll need to store your cryptocurrency in a wallet.
You’ll manage your private keys and the security of your cryptocoins. Your wallet is effectively an unbreakable digital vault where the password combination is only known to you (this is why you’ll need to take good care of your password!)
The types of wallet available to you are highlighted below:
Hot wallets
Hot wallets are software wallets that live on internet-connected devices like mobile phones, tablets, computers. Hot wallets ‘live’ on the internet and generate private keys in an online environment. While they are generally a reliable place to store funds, this is reliant on the security of your devices and can’t be by their very nature ‘100% safe’.
Think of hot wallets as your everyday wallet. Hot wallets are meant for storing crypto funds that you trade actively or might want to exchange for other cryptocurrencies or products. It is not advised to store large volumes of crypto coins in a hot wallet.
Exodus wallet
There have been numerous releases of different crypto wallets over the past few years and the Exodus wallet stands out to us. If we were to recommend a hot wallet to a crypto noob it would be Exodus.
Exodus wallet offers a complete crypto package; by this we mean it combines a crypto exchange and trading platform on its application allowing users to buy and sell their coins. Exodus also supports numerous different cryptocurrencies, which is great if you own more than one type of cryptocurrencies including some of the lesser known and supported crypto coins.
Key highlights of Exodus Wallet:
- Free wallet service
- Multi-cryptocurrency support
- Built-in trading platform and exchange powered by the Shapeshift.
- Backup features
- User-friendly interface with multiple themes to choose from
- Great customer support
To put it all together, the Exodus wallet lets you store your cryptocurrencies while also trading and swapping them for fiat currencies.
Cold wallets
Cold wallets are the most secure place to store your crypto funds. Cold wallets effectively take your crypto assets offline, so a hacker can’t access them as they don’t exist on any online network. Your private keys are generated in an offline environment, so they are almost impossible to be compromised.
There are three major types of cold wallets:
- Desktop Wallet - Wallet stored on your personal computer
- Hardware wallet - USB devices
- Paper wallet - Your private keys are printed on a piece of paper
One of the key benefits of hardware wallets is that these devices are not affected even if they are connected to a malware/virus-infected computer.
Unlike hot wallets, cold wallets aren’t free, but they are a very wise investment alongside your cryptocoin purchase(s). If you want to store a significant amount of crypto assets, cold wallets are definitely a worthwhile investment.
Ledger Nano S
Ledger Nano S or the more expensive variant Ledger Nano X is one of the best hardware wallets. Ledger Nano S supports more than 1000+ cryptocurrencies including any ERC 20 token on the Ethereum network. Both Ledger Nano S and Ledger Nano X come with a display screen.
The Ledger Nano S or it’s more advanced big brother, the Ledger Nano X are two of the best hardware wallets on the market. The Ledger Nano S supports more than 1000+ cryptocurrencies including any token on the Ethereum network (known as ERC20 tokens). Both the Ledger Nano S and Ledger Nano X come with a handy display screen making the user interface more friendly than most.
Key highlights of the Ledger Nano S:
- Display screen - This makes it more secure as the details are displayed in the wallet's screen and not the connected device.
- Two Physical buttons - To confirm a payment you need to press both the buttons simultaneously. This adds an extra layer of security.
- PIN code support - What if someone steals your wallet? Do not worry at all. Ledger Nano S has PIN code support. You can safeguard it with a 4 digit PIN code. No one can access your crypto funds, as after three unsuccessful attempts the device automatically wipes itself.
Summary
Deciding how and where to store your crypto coins is one of the most important decisions you can make in the crypto space aside from actually investing in the first place! The key thing to always remember is that the person who has the private keys is in control of the associated cryptocurrency. So always keep your private keys private and secure.
Storing crypto coins on an exchange platform will always carry risk and we’d always advise against this.
As far as hot wallets go, Exodus offers a wide range of services and is well known and respected within the world of cryptocurrencies.
For absolute security and peace of mind cold wallets offer the most advantages. Should you invest your funds, especially any significant volume it’s best to price in a good hardware wallet with your cryptocurrency investment. Think of it like buying a good quality safe in which to keep your digital gold.