Safest Way to Store Crypto
Currently, there are many different ways to store cryptocurrency, from applications and hardware devices to simple paper wallets. It’s important to understand which method is right for your particular needs. Some people use crypto exchanges for storage, while others use offline or online custodial wallets.
However, storing cryptocurrency safely can be a challenge. Because it’s not protected by the same laws as other assets, it’s up to you to choose a safe place to keep it. Keeping it secure can prevent theft. In fact, some crypto assets have already been stolen, with more than $37 million losing their value since the launch of Bitcoin.
cold storage, also known as offline storage, makes cryptocurrency more secure. Offline storage is a safer option than online storage, but the biggest risk is losing the device or forgetting your passwords. Hardware wallets are one of the most secure ways to store cryptocurrency. Some wallets have Bluetooth technology, and the hardware acts as a hardware security key. Other hardware wallets, such as TREZOR, are great options for more advanced crypto users.
What is the Safest Way to Store Crypto?
A custodial account, on the other hand, places your crypto in a third party’s hands. If the company where you store your crypto gets hacked or goes bankrupt, you could lose your crypto. Another risk is that the company may be a scam. This means you have to be vigilant in order to avoid falling victim to scammers.
Keeping your cryptocurrency secure is important, because crypto is essentially a digital file. The software and hardware wallets will not be secure if hackers are able to hack them. Hence, it’s vital to use strong encryption tools when storing crypto. These tools are inexpensive, and they will protect your crypto assets from hackers.
A desktop wallet, on the other hand, uses software that you install on your computer. However, desktop wallets still have vulnerabilities and are susceptible to cyberattacks. Malware infection, hard-drive failure, or remote takeover can all compromise your desktop’s digital wallet. In addition, users must maintain track of their private keys.
Most newcomers buy cryptocurrency from an exchange and leave their holdings in the exchange’s “custodial” wallets. However, this is risky because exchanges are targets of hackers. They’re the crossroads for billions of dollars in transactions, making them an attractive target. A high-profile case of exchange hacking took place in 2014, causing 750,000 bitcoins to be “lost.” A similar scenario happened in December 2017, when a hacker stole $60 million from NiceHash.
Using a hardware wallet is another option. Unlike a traditional computer, a hardware wallet is secure and won’t be hacked. It is also important to keep a paper copy of the hardware wallet’s PIN in a secure place, in case of your incapacitation.
