How to safely store money in cryptocurrency?
The cryptocurrency market is developing steadily. Digital money is successfully used not only as a convenient means of payment. They are effective as a working asset to generate profit from resale. This is due to the high volatility of all digital coins, because the rate fluctuates solely due to commercial regulatory principles, in other words, from the percentage of supply and demand. Depending on what strategy is used for crypto trading - trading, investing, staking - the method of storing coins will also differ.
The financial system of digital coins is a specific technical base with open source code. Since crypto money has only an electronic format of expression, it is natural that the management of such assets is possible only through special software - a crypto wallet. Technically, such software is a database that directly interacts with the blockchains of different cryptocurrency systems. To enter a bitcoin wallet or other crypto coins, special codes (digital-alphabetic combinations) are used. From these, a private key and a public key are created. The first one provides access to your monetary assets. The second is applied directly when conducting transactions. The functionality of different storage facilities available for the use of digital monetary assets differs. Therefore, it is important to navigate the range of available software in order to decide which wallet is best for storing cryptocurrency.
Types of wallets for storing cryptocurrency
Special software for digital coins is presented in two categories:
cold;
hot.
In each category there are several varieties that have unique properties and characteristics, a certain set of pros and cons. Based on these input data, the question of where to store the cryptocurrency is decided. The type of crypto wallet you choose directly affects the level of security of capital and personal data, the speed of transaction processing and access to your assets.
Hot wallets: advantages and disadvantages
Many users who often need to use crypto for various purposes, for example, to pay for various goods, services, or to trade using different trading strategies, prefer this particular software option. The main feature of cold wallets is a constant connection to the Internet.
Hot type software is presented in the following types:
Web version. A very convenient way to store cryptocurrency. Such wallets are classic websites, where you log in to your personal account using a login and password. Authorization can be performed from absolutely any digital device with an Internet connection. These types are used primarily for frequent microtransactions and storing small amounts of money, since the level of security is relatively low.
Programs for PC. In this case, the appropriate software is selected based on the operating system on the device. There are separate versions for Windows, macOS, Linux. The main advantage of such a crypto wallet is its additional functions. Regarding security, it all depends on the level of protection of the OS itself from hacking.
Mobile app. Such programs have less weight, but are functional. Transactions are carried out very quickly, because the software can be installed on any smartphone. To increase the security level of this software for storing digital coins, it is recommended to install two-factor verification, including fingerprint scanning modes, Face ID, and PIN code. To evaluate all the advantages of such a wallet in practice, it is better to purchase a separate device for it.
When choosing where it is best to store cryptocurrency, you need to correctly understand all the pros and cons of hot wallets. The advantages of this type of storage are as follows:
quick access from any digital device;
ease of use;
large set of functions;
easy setup;
fast transaction speed.
Of the minuses, the most significant is the relatively low level of security, many phishing and scam sites and applications.
Cold wallets: security and use
A cold wallet is a hardware wallet. That is, this is not separate software for installation on a regular gadget, but a separate physical device in the form of a digital data storage device. A cold wallet can even be called an ordinary piece of paper on which access codes to assets are written. However, more modern versions are most often used - flash drives, removable disks.
To use a cold crypto wallet, you must install special software for one or more types of cryptocurrency. To access your account, you must connect a separate device to your PC via USB or Bluetooth.
The main advantages of cold wallets where you can store crypto:
high level of security if the user responsibly chooses the method and location of key storage;
ideal for investing and staking;
the best solution if you plan to store large amounts of crypto money.
The disadvantages of cold crypto wallets are the loss of access to your assets if you lose the keys, as well as the high cost of the hardware devices themselves.
Creating and setting up a secure cryptocurrency wallet
When the question of how to store cryptocurrency has been resolved, you need to select a suitable service and software, then register and create your own individual account.
How to choose a suitable wallet?
Considering the fact that the owner of crypto assets is the one with the access codes, it is imperative to check the software you are interested in for compliance with the following criteria:
The level of security is a priority when it comes to deciding where to store bitcoins. Preference is given to software where you can individually configure two-factor or biometric verification.
Compatibility - the range of cryptocurrencies today is represented by several hundred options, but this does not mean that all types of crypto wallets support the full range of currencies. Usually the emphasis is on a few of the most promising species. Accordingly, when choosing a wallet, it is necessary to clarify whether it provides technical interface with the selected cryptocurrency systems.
User rating. Reviews from real users will help you get the right idea about a particular software. Using them, you can immediately obtain the correct analytics regarding the level of security and functionality, on the basis of which you can make a final decision.
Commissions. The use of some wallets occurs only on the condition of paying a commission for each transaction (not taking into account the miners' commission). Additional features may also apply. This is worth paying attention to so that the expected profit from trading digital assets corresponds to the real one.
Convenience of the interface. This aspect is assessed individually, based on your own preferences. You need to choose the software that you like the most, the use of which does not raise many additional questions.
The work of the support service deserves special attention. It must be prompt and of high quality.
Steps to set up a wallet
To start using digital coins, you need to follow the following path:
Create an account on the selected service or software. In some cases, confirmation of personal data is required. However, if the wallet is in high demand, there is no need to worry about privacy.
After confirming the data, you need to change the basic verification settings. It is better to immediately give preference to the two-factor format. It is better to set the password as complex as possible to eliminate the risk of theft of monetary assets.
To carry out a transaction, you need to take a wallet address - this, in simple words, is a cryptocurrency account (similar to a bank account).
Security measures when storing cryptocurrency
In addition to the anonymity of each participant in the cryptocurrency community and the specifics of using private and public keys, it is also important to take into account the factor of non-refundability of transactions. Based on this, due attention must be paid to security measures throughout the entire period of using a cryptocurrency wallet.
Protecting private keys
When choosing a place to store the private key that allows access to monetary assets, it is important to consider that the browser is not the best place to save passwords. It is through such an application that hackers most often operate.
Before entering your private keys on the chosen crypto wallet website, it is a good idea to make sure that it is not a phishing (fake) platform. Otherwise, the entered data will be stolen and used by scammers.
The importance of regular backups
Regular backups (once a week or month) are an important security measure. No digital device lasts forever. Technical failures can occur at any time. To avoid losing access to your digital coins as a result, update your backups at regular intervals.
Conclusion: summing up
Choosing a crypto wallet to store digital coins is not such a difficult task. The main thing is to always prioritize security and adhere to reliable methods of protecting personal data. In this case, you will be able to immediately appreciate all the benefits of using crypto for various purposes.
