You will require a crypto wallet to store your crypto. There are multiple types of crypto wallets in the market today. Each of these wallets has its advantages and drawbacks. Crypto users can use various wallets depending on their goals. This article will examine some of the best ways to store your crypto.
What Are Crypto Wallets?
Users need the private key in a crypto wallet to authorize crypto transactions. Cryptos are kept on a blockchain, but you need a crypto wallet to buy, sell, or trade cryptos. Cryptos are designed to be exchanged through digital transactions on decentralized networks known as blockchains. Crypto wallets are designed to make cryptos accessible to users to trade them. Crypto users transact between wallets by sharing a public key or wallet address, a unique account number for each type of crypto they own. Each crypto wallet also has a private key, and safeguarding this private key is fundamental to crypto storage.
Most crypto scams involve scammers getting access to private keys, which can result in losing crypto tokens forever. So securing these crypto wallets is vital because blockchain transactions are irreversible and permanent. There is no third party to protect crypto tokens, as they are decentralized. Let us look at some of the best ways to store your crypto.
Cold crypto storage solutions are offline wallets. They are usually a physical device, a USB drive, or custom-designed hardware with robust security features. Cold storage can also be paper documentation, but this method is slowly losing prominence due to the fragility of papers.
Cold crypto storage is considered one of the best option to protect your crypto. Criminals cannot steal your crypto while it is offline. A cold wallet is the best option for users who have a large amount of crypto to store. One of the major drawbacks of cold storage is that the process of sending and receiving crypto is comparatively slower than with other crypto storage options.
Hot crypto storage refers to an application that stores cryptos online. Hot storage can be mobile or desktop wallets, or other web-based crypto wallets. Hot crypto storage has a few distinct features. They give full control to users over their crypto. These types of wallets are free and easy to use. Crypto can be sent and received quickly with hot crypto wallets.
Hot crypto wallets consist of a recovery phase, and you can use this phrase to get your crypto back if you lose access to your hot wallet. These type of wallets are usually for users who want quick access to a particular crypto.
Software crypto wallets are another way to store your crypto. This crypto wallet is in the form of software installed on a mobile device or computer. But software wallets are only as safe as the device they are installed on. Some crypto users might consider an exchange more secure than these wallets. Software wallets are safe to use as crypto users usually store recovery phrases and private keys offline.
Paper wallets are physical crypto wallets and are another type of cold storage. Paper wallets are printouts that consist of public and private keys. These keys are usually a string of characters and have scannable QR codes. Crypto users receive crypto with a paper wallet using public keys and send crypto by scanning the public and private keys. Paper wallets provide the same security as other hardware wallets as crypto is stored offline. These wallets allow crypto users to store crypto securely at a low cost.
Multi-signature crypto wallets involve transactions having to be approved by several people to execute. This feature limits the threat of a scam or theft, as a single user or server cannot complete transactions. The people who approve crypto transactions are decided at the beginning when one wants to transact a certain type of crypto. Crypto users must ensure they know the people and trust them before joining a multi-sig wallet.
The major drawback to this wallet is that it is not suitable for active daily use and is inconvenient. A suitable use case for this wallet would be for a treasury fund where multiple people sign off on crypto transactions.
There are many ways to store your crypto securely, and you can start by choosing either one or two crypto wallets. They type of wallet you use depends on the frequency at which you carry out crypto transactions. If you are someone who buys and intends to hold your assets for a long time, then a hardware wallet could be more suitable for you. If you are someone who trades regularly, then you might consider keeping your assets in a software or an exchange wallet. Irrespective of where you store your assets, security must be paramount. Ensure that all the checks and balances are in place when you store your crypto.
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.