Once you invest in cryptocurrency, it is primarily important to secure your investments.
With rising numbers of cyber-attacks, chances of crypto theft have also soared nowadays. Reports suggest that almost 3.7 million crypto coins have been lost to date.
But thankfully, there are different methods too, to protect the cryptocurrencies you own. You need to keep your assets safe by adopting methods that suit the type of asset you have in possession.
Here are the most effective methods to consider for storing crypto assets.
Storing cryptocurrency in a custodian wallet
For crypto storage, custodian wallets are the most preferred option above all. Your crypto asset is kept safe by third parties via online and offline or both methods.
Generally, when you purchase cryptocurrency through P2P trading platforms or otherwise, the assets you gained are preserved in your wallet under the control of the app, platform, or stockbrokers. And if you wish to store it yourself, you are free to transfer the assets to hot or cold wallets. Not every platform permits such transfers.
Now let us discuss the advantages of using custodian wallets to preserve investments.
- The user does not have to put in a lot of effort or time
- It is easier to access and trade your assets without hefty procedures as they are kept safely in your personal account.
- It is one hundred percent guaranteed that one of your crypto assets goes missing as far as you have aces to your account.
Storing cryptocurrency in a cold wallet
Cold wallets, otherwise called offline wallets, are considered the safest means of preserving cryptocurrency investments. There are numerous cold crypto storage options available, of which the most popular one is the hardware wallet.
You might be wondering what these hardware wallets are. These devices can be connected to your desktop for storing your crypto investments. This is the safest method because they preserve your funds offline.
Here are how cold hardware wallets operate:
- Not all hardware wallets are built to sate the same type of cryptocurrencies. There are specific wallets for each asset; some are made to store smaller assets, while some can handle 1000 plus cryptos.
- By connecting the hardware to your system, you can transfer crypto from different addresses as well. Every hardware wallet has a unique recovery phrase that nobody should share. This is because by having access to the recovery phase, they can access your crypto, lock you out or even steal your assets.
Storing cryptocurrency in a hot wallet
Hot wallets are the online ones. even though cold wallets are considered safer than hot wallets, the biggest downside of offline wallets is their inconvenience. Those who find offline wallets not efficient enough can switch to holt or online wallets.
Here your crypto assets are stored online and are easy to make trade as you remain online the entire time. This hardware a readily available as apps that can be installed on the desktop. If you are not comfortable with the app, you can go for web-based hot wallets.
Significant advantages of using hot wallets:
- Freely available almost every time.
- The owner has control over the assets
- Speedy transactions and user-friendly.
Storing cryptocurrency in a physical wallet
The physical wallet is a variant of a cold wallet where you have a printout of private keys and QR codes. These are popularly known as paper wallets and are completely free and offer maximum security with almost zero cost. The major downside of paper or physical wallets is highly inconvenient.
The most popular methods of safeguarding cryptocurrencies
- Store the bulk assets in a cold wallet while using a smaller or hot wallet if you want to carry out frequent trades.
- Never share the recovery phrase or private key with anyone, nor save them to your computer.
- Write down every recovered phrase of your wallet; you can either physically write down these or use steel tools that do the job well.
Storing crypto assets safely is a significant component if you are active in the cryptocurrency market. As soon as you earn crypto, transfer them to the wallet, note down the recovery phrase and store it somewhere safe.