Safe and unsafe ways of storing cryptocurrencies

There are various ways of storing cryptocurrencies, regarding which you need to make decisions yourself, given various factors.

The first difference is cold and hot storage. Cold storage (offline) means that only you will have access to your funds and the wallet will not be connected to the network. Hot (online) is the storage of a key on some server. The second criterion follows from the first and implies directly the place where the key will lie. These places are exchanges, multicurrency web wallets, mobile or desktop applications, paper or hardware wallets. The third, less important classification criterion is the number of currencies. There are single-currency and multi-currency wallets. The latter make it possible to throw everything in one basket, which is quite convenient, but less safe.

Hot storage

Hot methods, among other things, are divided into controlled and uncontrolled. The first involves storing the private key on your device, however, the wallet still has access to the network. This method is reliable if you monitor the security of your device (protection against phishing, malware, etc.).

Uncontrolled — these are wallets that are fully connected to the server, where your private key is stored. Making such a choice, you should be very attentive to the service itself, because on the Internet there are some hacks.

Stock exchange

Choose an exchange only if you intend to trade crypto or exchange it for fiat and withdraw immediately. But even in this case, it is better to keep a small amount there. Exchange storage does not give any guarantees of the safety of funds and high protection against hacking. From the exchange you need to withdraw funds and choose something more reliable.

Online Wallets

Many people try to “take care” of the convenience of cryptocurrency owners and create a lot of different services for its circulation and storage. One of these services is multicurrency online wallets. Yes, they allow you to store 10–20 cryptocurrencies in one place, conduct operations with them, but this is not a place where it is safe to keep your funds constantly. These service wallets are very often prone to attacks, as they have lower protection than exchanges.

Smartphone is always at hand

What good is such storage? Fast transactions, wherever you are, just to have access to the Internet. Some wallets also allow you to store multiple cryptocurrencies. But how safe do you think it is? Even opening up access to hidden files and folders, you do not see everything that is stored on the phone. Namely, there lies access to your secret key. If you put a virus in your smartphone, then he can get it.

Cold storage

Another important document

In fact, this is a piece of paper with a code and a QR code that will allow you to manage your money. A paper wallet does not fully live up to its name. You can take a picture of it (only restrict access to this photo somehow), create a document on your computer and store it there or throw it on a USB flash drive.

All on a flash drive

This is the best way to store your cryptocurrency. Even if you lose this treasured flash drive, access to it will not be so simple. In addition to the pin code, there are still 24 keywords.

Make the right choice

Today, the cryptocurrency market offers a variety of storage methods, which differ not only in the place where you can hide your keys, but also in their types. When you make a decision, there are a few things to consider, the most important of which is Security. The security issue needs to be reviewed several times, and only then make a decision.

Choosing even the most reliable storage for your cryptocurrency, you still remain exposed to unforeseen risks and dangers. Unlike the fiat currency, in the world of cryptocurrencies no one will protect you and will not compensate for your losses. You need insurance.

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