Security is a priority: where to store cryptocurrency?

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16 June 2020
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Cryptocurrency storage - IQeon

Buying cryptocurrency is just the first easiest step. The second thing to do is to decide where to keep your savings. However, if the owner has chosen wrong wallet, the purchased assets can be easily lost.

Today we will tell you where you can store accrued capital in order to protect it from fraudsters, and will analyze the advantages and disadvantages of different types of wallets.

Hot storage

It could be stated with confidence that most traders use hot wallets available 24/7. They include external servers and programs, cloud storage and trading platforms that require a network connection.

  • Online wallets

For those who are just learning the basics of cryptocurrency business, online wallets may be the best option. They open access to virtual money from anywhere and any device using the “Login/Password” pair. Personal data as well as the private key are stored directly on the servers of the provider company. All you need is a trouble-free Internet connection and knowledge of your password.

However, there is a huge flaw behind maximum accessibility: users have no full control over their private key – everything stored online can fall prey of technical failures or hackers. In case of malfunction, there is a risk of losing access to your own funds forever.

Online wallets are suitable for novice traders, as well as for those who work with small amounts of money. Among them Rahakott, Blockchain Wallet and Holy Transaction are popular.

  • Desktop crypto wallets

Desktop or local wallets are very popular due to their independence, because even if the server stops working, access to funds will still be preserved.

When working with these wallets, crypto operations require the installation of special software on a personal computer. Most often, developers create wallets for a specific cryptocurrency, regularly updating software and identifying vulnerabilities.

Although local crypto wallets provide a high level of security, there is a risk that a hacker will try to crack your computer in order to steal virtual coins. Therefore, when installing a desktop wallet, you need to take care of protecting your PC, in particular, install a good antivirus.

There is a demand for wallets such as Exodus, Electrum and Jaxx.

  • Exchanges and сustodians

On trading platforms, you can not only conduct operations with cryptocurrency, but also store assets. As a rule, when registering on exchanges, user needs to go through the KYC and AML procedures, which to some extent is a guarantor of asset protection. Keeping a small amount of crypto coins and tokens on exchanges is safe, but lately trading platforms have been progressively attacked by hackers. So the storage methods of the exchange must be carefully checked.

And custodians are web wallets, with the only difference: in case of losing your wallet password, you will still have a chance to regain access to funds.

The most secure among exchange wallets are Huobi, Kraken and Poloniex.

Cold storage

If investors aim to store crypto assets in the long run, cold storage, which includes the use of offline wallets, is the best. This method assumes complete protection against data leakage and manual confirmation of transactions. Of course, entering a long private key is not always convenient, but this is the only way to protect yourself and your crypto assets for 100%.

  • Paper wallet

Perhaps the easiest way to protect the private key from stealing is to write it down on paper. In order for the key to be the most secure, you can use the services of random generation, the number of which is vast in crypto space.

More advanced traders generate a QR code and when conducting transactions simply scan it so as not to enter a long row of the key manually.

  • Hardware wallet

At the core, a hardware wallet is an advanced flash drive containing information about the movements of the cryptocurrency on the owner’s account. Previously, these wallets looked like regular USB drives, but now models with a display and control buttons have appeared on the market. In this case, you don’t even need to connect it to a computer: to conduct a transaction, you just have to press the button on the device’s screen. The only flaw of this storage method is the possibility of losing the device by inattentive users.

The most famous models of such wallets are KeepKey, Ledger, Trezor.

***

Knowing how to safely store cryptocurrency will help you not to get trapped by attackers and save your assets. But it is important to know not only where to store cryptocurrency, but also how to do it. Here our guide is of great help, where we shared popular ways to protect cryptocurrencies.

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