How to store Cryptocurrencies by yourself? What is the best method?

How to store Cryptocurrencies by yourself?

Electronic money has become the standard of modern life – now it can not only be earned and spent, but also lost or stolen in the same way as ordinary fiat money. Just buying and storing cryptocurrency is not enough; it also needs to be protected.

In the digital world, information is everything. Cryptocurrencies are practically not regulated by law, and therefore the security of personal crypto-money is an area of ​​special personal responsibility. It is necessary to carefully choose both the “bank” and the “ATM”, and the security system. The correct decision on how to buy and where to store cryptocurrency ultimately guarantees the safety and efficiency of using your finances.

Recall that the most important element of any cryptocurrency wallet is the private key (or keys), which allows transactions, that is, to buy and store cryptocurrency on the blockchain. Unauthorized access to the key or its public disclosure with a 100% guarantee means the loss of your money.

Buy and store cryptocurrency yourself

Depending on the security mechanism for private keys, you can choose crypto wallets:

1. Hardware

An external storage device is used that connects to a PC or any smart device as needed. Private keys are stored separately from the hardware on which transactions are actually processed. A system of personal PIN codes and special recovery codes provides additional protection against theft or burglary. It is considered the most reliable, basic storage option.

2. Desktop

Special software processes and stores information on a stationary device – a distinction is made between “thick” and “thin” wallets. The former must be downloaded with the entire blockchain, which is constantly updated and requires more and more resources (“cold” storage). When using “thin”, all current information must be taken from the network during each session (“hot” storage) and the level of transaction security is significantly reduced.

3. Mobile

Access to digital assets through the application on smart devices is a convenient way to buy and store cryptocurrency for those who are used to frequent transactions in everyday life. Comfort comes at the price of loss of protection. Due to the fact that the client of the application does not use the local (downloaded from the network) blockchain, but only works with the data of the remote server, there are additional “chances” to steal information during the exchange. In no case should you store large amounts in a mobile crypto wallet, even if it seems super reliable to you?

4. Paper

In fact, this is a paper copy of the private and public keys: special sites generate bitcoin addresses and create two QR codes that need to be scanned in order to buy and store cryptocurrency. transactions. This archaism document is not afraid of systemic and technical problems, it cannot be stolen by hackers (although ordinary people can easily), but it must be protected from fire, water and other disasters and carefully hidden from prying eyes. If the document is lost or damaged and you do not have additional encryption enabled, you can say goodbye to the money.

5. Online wallets

Technically, this is an ordinary web resource that for some reason you trust to store your personal data, including private keys. All network risks (phishing, viruses, hacker attacks) will be yours in full. The speed and convenience of transactions are the only positive of such wallets, but this type of storage is popular among beginners. Literate users use such wallets as little as possible and only for small amounts.

Buy and store currency on a crypto exchange

It is becoming more and more dangerous to store currency on a crypto exchange, especially since until the collapse they all usually look very authoritative – remember MtGox or the Bancor decentralized platform. New Zealand’s Cryptopia became the first cryptocurrency exchange to be hacked in 2019, as a result of which, according to official estimates, it lost more than 10% of its assets, but in fact, much more.

If you register on the exchange, create an account on its servers, then the wallet numbers, keys to them and other information are stored there, and you get access to the funds through the network after entering your login/password (and / or other data). Hacking an exchange means leaking private data and almost complete access to the funds of its clients.

Low commissions for transfers from wallets to the exchange and vice versa can be considered a positive. It is convenient only for traders, since the exchange is, first of all, a trading platform, so the set of additional functions of such wallets is usually disappointing.

When deciding where to buy and store cryptocurrency, we use the usual everyday logic: we diversify without fail! We proportionally distribute capital across different devices, resources, assets, business tasks; We keep the main capital in classic, market-tested and time-tested currencies; we invest wisely in “young” tokens. We place large amounts on only hardware or desktop wallets, optimal – “cold” storage on external media, on mobile and online wallets – only the minimum required working capital.

If a crypt is needed for active payments, then a multifunctional multicurrency wallet (preferably a hardware wallet!) With the ability to deposit/withdraw to fiat assets will be optimal. The more often transactions are carried out, the more stringent hardware protection should be.

It makes sense to store only the active part of the crypto capital on the accounts of the exchange, which is involved in the process of earning. We regularly withdraw profits from the trading platform to wallets, transfer them to fiat or invest in traditional assets.

List of Cryptocurrency Exchanges