Where to keep cryptocurrencies? Which wallet will work best?
Where to keep cryptocurrencies? - is one of the most frequently asked questions by novice investors. Safely storing your assets is very important, no matter what digital currency you are investing in. If you want to find out where to keep and how to secure cryptocurrencies, read our article. We invite you to do so!
There are several options for storing cryptocurrencies. The first is to keep your assets on an exchange, the hub of the virtual currency world. Unfortunately, this solution has quite a few drawbacks. First of all, the operation of cryptocurrency exchanges is not governed by detailed regulations, and no organization watches over their operation. So, if your assets disappear and you demand compensation from the exchange, you have little chance of a positive resolution of the case. Unfortunately, these are not the only disadvantages of storing cryptocurrencies on an exchange. Assets held on exchanges are a greedy morsel for fraudsters and hackers. This is due to the fact that there are a lot of savings available on exchanges, which are not controlled by any financial institution.
So, cryptocurrency exchanges are best thought of as service providers where you can buy and sell virtual currencies. However, if you intend to store your assets, transfer them to an offline or online wallet.
Online cryptocurrency wallets (hot wallet)
Assets can be stored in online cryptocurrency wallets. These include mobile, browser and desktop wallets. The first, or mobile wallets, come in the form of an app for your smartphone or tablet. They allow you to make quick transactions by scanning a QR code. Their disadvantage is that they provide an average level of security. They are dedicated to people who want to store a small amount of cryptocurrencies in their wallet. Another type of online wallets are browser-based models. They are accessible from both mobile devices and computer. Their big advantage is convenience and accessibility. Unfortunately, they are not fully secure, so they are recommended for people who want to store a small amount of assets for a short time. Cryptocurrencies can also be stored in a desktop wallet, an application that you simply download and then install on your computer. Desktop cryptocurrency wallets are divided into lightweight and full cryptocurrency wallets.
Offline cryptocurrency wallets (cold wallet)
Offline cryptocurrency wallets are considered the most secure because the assets stored in them are separated from the network. This prevents hackers and scammers from accessing them. There are currently two types of offline cryptocurrency wallets: USB wallets and paper wallets. The former are also known as hardware wallets. USB cryptocurrency wallets resemble a flash drive. Special software is installed on them to manage the collected assets. In order to perform transactions using them, they need to be connected to a desktop or laptop computer. Only encrypted and signed transactions are forwarded. It should be noted that the private keys do not leave the special device, so USB cryptocurrency wallets can be used even on infected devices. Moreover, USB cryptocurrency wallets allow you to create backups. Their great advantage is that even if they get damaged or lost, you have a chance to recover their contents. With a USB cryptocurrency wallet, each transfer must be authorized by manually entering a PIN code. This type of wallets is characterized by extreme security, so you can store more cryptocurrencies on it without any obstacles. So do USB wallets have no disadvantages? Their only downside is that they are not very convenient.
The second type of offline cryptocurrency wallets are paper models, which are cards on which public and private keys are printed. They are characterized by high security, but they need to be properly protected. It is best to store them in a safe or a place inaccessible to third parties. It is advisable to make a copy in case the original is destroyed or lost. The big advantage of paper cryptocurrency wallets is that they are free and easy to make. Unfortunately, they are not the most convenient. In order to perform transactions using them, you need to import your private key into an app or private key to begin with. Moreover, it is worth remembering that paper wallets can only store one type of virtual currencies.
Attention! The above article neither in whole nor in part constitutes a "recommendation" within the meaning of the provisions of the Act of July 29, 2005 on trading in financial instruments or the Regulation of the European Parliament and of the Council (EU) No. 596/2014 of April 16, 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6 / EC of the European Parliament and of the Council and Commission Directives 2003/124 / EC, 2003/125 / EC and 2004/72 / EC and Commission Delegated Regulations (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65 / EU of the European Parliament and of the Council as regards organizational requirements and operating conditions for investment firms and defined terms for the purposes of this directive. The content contained on the website does not meet the requirements for recommendations within the meaning of the above-mentioned act, incl. do not contain a specific valuation of any financial instrument, do not rely on any valuation method, and do not identify investment risk.