4 Smart Ways to Store Cryptocurrency Safely in 2020
From the moment of its creation, the cryptocurrency system has the goal of digitizing all revenues and expenditures of users. The main feature of digital coins is their virtuality. This makes them intangible and they don’t have a physical embodiment. Therefore, you can’t lose them, but they can still be stolen from you. Since the whole system is a technological invention, you must always be aware that it’s subject to hacker attacks at all times. In order to ensure and protect your property in a better way, it’s necessary to store your cryptocurrency in the right way. Unlike traditional currencies, these can’t be found in paper or metal form, and therefore you can’t keep them safe and sound in a bank safe, wallet, or under a mattress. Yet, there are still ways you can store them in this digital form as well.
Every transaction that the user wants to make requires an internet connection, and that’s more than enough for cybercriminals to access your savings. In the end, you’ll be harmed as criminals can easily hide their identities, remain anonymous and it won’t be possible to track them down. To spare yourself these worries, we bring you a guide on how to store your digital money wisely.
Hot and cold wallets
Just as you keep fiat currencies in your wallets, there are software-designed wallets that store your public and private keys. Also, they’re used for the transfer of cryptocurrency, their receipt and sending, as well as for constant insight into the financial situation. With their help, you manage your property and keep it.
The basic division is into hot and cold. A hot wallet requires a good internet connection to be used. That way, you’ll be able to access it anytime, anywhere. All the hot ones are consolidated online on the cloud, regardless of whether they’re software or mobile, as well as all exchanges. Although less secure, they’re easier to access and are free in most cases.
Cold storage doesn’t work with the help of an internet connection, which is why you store all your savings offline. These are hardware storage spaces, such as USB, a computer without an Internet connection, and other storage devices. In this case, transfers aren’t possible at all times, but you can still receive funds. For long-term storage of cryptocurrencies, this option is much more secure than the previous one.
Each one of these two has its advantages, which is why users usually decide to own both. It’ll be easier to trade with the hot one and to keep the money with the cold one for further investments for a long time.
Here are some categories of crypto wallets. So if you’re still thinking about the best solution, take a look at this.
1. Paper wallets
This type belongs to the cold group. The paper type includes a printed paper version of your private and public key and you can physically keep it with you. In software terms, it’s a digital file to print. The high level of security achieved by its use should be especially emphasized. You can perform asset transactions by simply scanning the QR code. The only condition that needs to be met is that this possibility exists for the cryptocurrency you have chosen. Once you have determined this, you’ll easily create one with the help of the tutorial.
Although it belongs to a safer group, that doesn’t mean that its use doesn’t carry any risks. They can be copied, painted, or damaged quite easily and in any way, so you should take care of it yourself. If you decide that someone will do it for you, you must have full confidence. To reduce the risk of unforeseen situations, you can make copies.
2. Cloud wallets
This is a kind of online assets which belongs to the hot group. The cloud is considered a great storage space, as you can access it at any time, from anywhere, and from any device. The disadvantage are the private keys that are stored online, and are therefore compromised by third parties. Some of the popular cloud variants are Coinbase, Guarda, and Blockchain.info.
A slightly safer version of the cloud type are non-custodial online wallets. They can be accessed via the web and app but no one but you will have access to your private keys. The good news is that they aren’t part of the exchange platform, which gives you extra security.
3. Software wallets
The software type is designed so that each user can download it to their device as an application and install it on either a computer or a mobile phone. They belong to the group of hot storage and offer a certain level of security. However, it’s a technology that can become the target of hacker attacks at any time, so you have to be careful.
You may find it inconvenient to keep this wallet on your computer as it’s less mobile. To make it more convenient for you and to be able to access the data you need at any time, it’s recommended to install it on a smartphone.
4. Hardware wallets
The main advantage of the hardware type is that your private keys are stored on external devices such as USB. They belong to the group of cold storage methods, provide you with much greater security, and are less exposed to the risk of cybercrime. They are eligible for payments and can support multiple different cryptocurrencies.
Transactions are done quite simply. All you need to do is connect to a device that’s connected to the network, unlock it, and make a payment. The disadvantage is that they aren’t free as a software type but involve certain investments. Those with more experience advise that you shouldn’t buy devices from people you don’t know, but only directly from the manufacturer. Otherwise, you won’t be safe.
The way you store your cryptocurrency is up to you. All you need to do is be well-informed in time about which option best suits your needs and whether you would make long-term savings or make frequent transfers by trading. After all, you can’t go wrong – it’s just important to be careful enough.