How to Safely Store Cryptocurrency

How to Safely Store Cryptocurrency

How to Safely Store Cryptocurrency

Today, we are going to talk about how to safely store cryptocurrency. It is all about how you are securing your funds, and when it is about securing, we need the best ways to secure them so that they cannot be stolen.

When you own a cryptocurrency, you need to think of storing it safely as they are so valuable nowadays.

Cryptocurrencies don’t have the same types of protection as wealth in a bank account and some investments made through a broker. Being an owner of cryptocurrency, crypto storage is on your own responsibility.

If you lose access to your cryptocurrency, it will be gone. This is a common issue that has been happening since the launch of Bitcoin. It is estimated that around 3.7 million bitcoins were lost forever.

You might have several options to store crypto coins that include applications, hardware devices, and some simple pieces of paper. Once you acknowledge more about each storage method, you can easily choose the wallets that will keep your cryptocurrency safe.

So, is storing cryptocurrencies in a custodial wallet, right?

Well, a custodial wallet is known as the default option for crypto storage, and a third party somehow holds the cryptocurrency for you with this custodial wallet. It is either offline or cold storage, online or hot storage, and even a combination of two.

When you are buying coins from cryptocurrency exchange apps as well as stockbrokers, they will be put in a custodial wallet that they control. If you desire to store it yourself, you can transfer it to your hot or cold wallets.

However, not all crypto platforms allow the same thing as some apps or stockbrokers only let a user buy as well as sell crypto but not transfer them anywhere. So, the only option remaining is to use the custodial wallet in such cases.

Various investors prefer custodial wallets for their cryptocurrencies with no issues, and there are several advantages to this wallet as well. Firstly, it requires the least amount of work on the part of the user.

Since the crypto is stored in the account, it is easy to access it if you desire to trade it, and finally, you will not need to be worried about losing a crypto wallet. As long as you can access the account, you are eligible to access the crypto.

On the other hand, a third-party control all your cryptocurrencies, and you are relying on the security measures as well as trusting that it won’t lock out your account. Although some custodial wallets are not as secure as using your crypto wallet, there are other convenient options to invest in cryptocurrency.

Recommended Exchanges (affiliate links)

If you decide to stick to a custodial wallet, you need to ensure that your platform has high-security standards. In that case, we recomment platfroms like Binance and KuCoin that also have the lowest fees in the Crypto market.

What about storing your cryptocurrency in a cold wallet? What exactly is a cold wallet?

Well, it is an offline cryptocurrency wallet, and there are distinct methods of cold cryptocurrency storage, including making your personalized free paper wallet. But the common type of cold wallet is a hardware wallet.

Hardware wallets are small devices connecting with your computer and storing cryptocurrency. They will connect with the internet while sending or receiving the cryptocurrency, but you need to keep your funds offline.

How does a cold hardware storage wallet for cryptocurrency work?

Firstly, each hardware wallet for cryptocurrency owns some types of cryptocurrencies to be stored, and some have more than 1000 while others can store a smaller number, like bitcoin and other crypto coins.
When you are connecting to your hardware wallet with the computer, you can generate the address to receive cryptocurrency to the wallet. You can also send cryptocurrency from a single wallet to another cryptocurrency address.

Each of the cryptocurrency hardware wallets has a recovery phrase that is known as recovery seed. This phrase allows one to recover their cryptocurrency if they lose the device, and it is highly essential to keep it safe because anyone who has it could take the crypto.
Offline cryptocurrency storage is considered the primary option from a security perspective, and multiple platforms can use it to protect most of their cryptocurrencies. While the cryptocurrency is offline, it cannot be easily stolen by hackers.

For a massive amount of cryptocurrency, the cold wallet is a great investment, and there are multiple highly reviewed hardware wallets available from 50 USD to 150 USD. However, the huge downside of cold wallets is the convenience factor. Since you are required to hook up the cold wallet to move cryptocurrency, the process is a bit slower than it would be if you kept everything stored online.

What is it to store cryptocurrency in a hot wallet?

A hot wallet is an application that stores cryptocurrencies online and hot wallets are available as mobile apps or desktop applications, and there are multiple web-based hot wallets too.

Moreover, hot cryptocurrency wallets have notable good points. They have control over cryptocurrency. They are always free, easy to use, and can receive crypto easily with this wallet.

Like hardware wallets, hot wallets have some recovery phrases, and you can use those phrases to get your cryptocurrencies back if you ever lose access to the wallet. Unfortunately, hot wallets also have a problem, but it is a massive one. Because they store cryptocurrency online, they carry the risk of being hacked. Though the odds of this are low, and multiple people use hot wallets without any issues, they have a risk they would desire to take with significant crypto funds.

Now comes storing cryptocurrencies in a physical wallet (or paper wallet)

A physical cryptocurrency wallet is known as a paper wallet and is yet another type of cold storage.

The paper wallet is a printout of private and public keys and a string of scannable QR codes and some characters. These keys will help you make your cryptocurrency transactions. You will receive cryptocurrencies with a paper wallet using the public keys to send crypto from the wallet and will require to scan these private and public keys.

Paper wallets also have some advantages as hardware wallets where provide greater security by keeping the crypto offline. Moreover, it is practically free to make your own and ideal if you desire the utmost security at the lowest possible price.

The downside is that the paper wallets are the least user-friendly cryptocurrency storage, and anyone can follow the steps to make their own paper wallet.

What are the best practices to store cryptocurrencies?

In such cases, what are the best practices to safely store cryptocurrencies? For that, you can store the bulk of your cryptocurrency in a cold wallet. Since the cold wallet is the most secured option for now. On the other hand, you can use a hot wallet or a custodial wallet for a few cryptocurrencies that you desire to be available for trading.

You can get the physical record for the recovery phase for your crypto wallets. You can also write them down, and there are steel tools designed for recording cryptocurrency recovery phrases.

Finally, save your recovery phrase in a secured location that is accessible by you only. Never share the recovery phrase of your cryptocurrency wallet or private keys with anyone. Don’t even save it to your PC.

Should I use a VPN for cryptocurrency?

Using a VPN makes a lot of sense in the crypto world. To begin with, paying for a VPN with cryptocurrency increases your anonymity by concealing your payment information from virtually everyone.

VPNs provide an additional layer of protection against malware, viruses, and phishing attacks. In addition, it masks your IP address to prevent hackers, government officials, and forensic analysis firms from tracking your IP address. So, VPN’s allows you to buy and sell cryptocurrency completely anonymously (if you avoid KYC/AML exchanges).

Hackers will be unable to spy on your transactions because a VPN encrypts your data. It also conceals your IP address and prevents persistent tracking. So, it ensures that your physical location is not associated with your blockchain wallet address.

What is the best VPN for Cryptocurrency Transactions?

NordVPN. NordVPN is by far the most secure and privacy-oriented VPN for cryptocurrency transactions, in our opinion.

How To Spot And Avoid Crypto Scams?

A simple way to tell if a token is a scam is if the investment scheme promises unrealistic returns in a short period of time. Another sign of a scam token is if scammers promising crypto giveaways ask investors to send them a few coins for address validation.

So, these are some of the ways on how to safely store cryptocurrency. What do you think of these ways? Do you think they will work and secure your cryptocurrencies?

Let us know your views in the comment section below.

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How to Safely Store Cryptocurrency

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How to Safely Store Cryptocurrency

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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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