Crypto wallets are hardware or software that works as a medium between your stake and the blockchain, allowing users to store, send & receive crypto. Meanwhile, Exchanges are online marketplaces where an individual can buy, sell, and trade cryptocurrencies.
- Storing Cryptocurrency is an important task in the current scenario of trending cryptocurrencies, and the most important thing is to keep it safe from various problematic techniques like Hacking or Malware.
- By varying methods, one can reduce the risk of losing data or assets storage methods being compromised. One should also use a firm or updated form of wallet by a reputed manufacturer.
Importance of Storing Crypto
Cryptocurrency is a form of digital tokens designed to be exchanged via Decentralized networks of computers through encrypted transactions. These tokens exist in the blockchain, and crypto-wallets make it accessible to send or receive these tokens between different accounts.
The importance of storing crypto safely and protecting Private keys is a lesser-known fact among new investors. A Private key is like a password to access your online banking account. A user will lose access over a token if the private key is lost and also doesn’t remember the SEED PHRASE, which works as a security question to get access over the wallet. That’s why Crypto Storage security matters because the whole network works over a decentralized blockchain network, and no third-party/institution (Bank or Govt) is responsible for your loss and guarantee for your investment.
Types Of Storing Crypto
The main methods of Storing Crypto are basically of two types:
Exchanges are digital marketplaces where one should use real-life currency to purchase Cryptocurrencies like Ethereum and Bitcoin. Trading one type of currency for another and converting crypto back into cash. A user’s account on a centralized network is considered a wallet. Storing crypto on an exchange means Business Retail has Control over assets, and users can’t access the Private keys.
While many Exchanges are reliable, vigilant, and ethical, one exchange can affect the entire industry if being ruined.
Generally known as Hot Wallet, Crypto Wallet is a software-based software-based mechanism that works in collaboration with an exchange. A user’s account on Exchange can be defined as Hot Wallet, as it’s connected to a network. A Self-Custody or Non-Custody hot wallet is a network connected where a user can gain access to its Private Key and Seed Phrase for their crypto assets. These Keys are stored in the Application itself. Accessing a non-custody wallet using a web browser or software is easy. Still, like everything online, it makes these wallets unsafe for cybersecurity threats, hacks, and scams.
Which One Is Safe?
Varying investment methods can reduce the risk level, but spreading the assets over multiple storage is a good option. On a technical aspect, the safest way of storing crypto is Hardware Wallet. Hardware wallets are the physical devices that hold the Private key to the Crypto address offline. This helps to make your assets more secure and less vulnerable to the threats of scams and hacking attempts. As an Additional Backup, one should keep a physical record of the Private key and recovery phrase that should be stored offline, for example: on a piece of paper as a written Document.