Where Is It Better to Store Cryptocurrency: On an Exchange or in a Wallet?

In fact, all cryptocurrency wallets are divided into “hot” and “cold.” The difference between the two is that hot wallets reside on computers or servers that have access to the internet. The feature of “cold” ones is that all data is stored offline. Now let’s try to understand the issue in more detail.

“Hot” storage

Cryptocurrency exchanges and online services are the most popular way to store digital assets. The bottom line is that you trust the storage of your funds to some internet services.

Pros:

  • The ability to perform various operations quickly, whether it is the exchange of one cryptocurrency for another or withdrawal to fiat.
  • You can get access to such a wallet from anywhere in the world, just remember the password.

Cons:

  • Lack of control over your funds. Any exchange can block your account at any time.
  • Exchange or other online service is a private target of hacker attacks.
  • Many exchanges require personal identification, you must be prepared to provide your personal data. Although, there are online wallets that allow you to remain anonymous.

“Hot” storage: Crypto wallet for PC

Such a wallet looks like a program installed on a hard drive. In turn, they are also divided into two varieties — thick and thin. Thick ones download the entire blockchain of the stored cryptocurrency to your computer. Thin ones do not require downloading the entire blockchain but turn to online resources for the necessary information. The first option is more reliable but takes up more space.

Pros:

  • Fairly reliable storage method. Hackers are rarely interested in such storage.
See also  Leonardo DiCaprio sees bread in Dutch meat | to do

Cons:

  • Take up a lot of hard disk space.
  • Access to the wallet only from your computer.
  • Long transactions.

Cryptocurrency wallet for smartphone

It is an application installed on your mobile phone that allows you to access your assets quickly: buy cryptocurrency and exchange cryptocurrency on any cryptocurrency exchange service like Changelly.

Pros:

  • Ability to use cryptocurrency in everyday life to pay for goods and services.
  • Lack of connection to a PC.

Cons:

  • The main disadvantage is low reliability. The smartphone may be stolen or hacked.

Cold storage

Hardware wallets are specially designed devices that resemble regular computer flash drives. They allow you to access cryptocurrency on any PC that has a USB input and appropriate software. In addition to having the “flash drive” itself, you will need to enter a private key for access.

Pros:

  • High reliability.
  • Ability to use on different devices.

Cons:

  • In case of loss of a “flash drive” or loss of a private key, recovering funds can be hard or even impossible.
  • Inability to carry out any transactions with assets promptly.

Paper wallets

In this case, the private key is simply written down on paper and stored in a safe place. This storage method can also be equated with storing a private key on a PC that is not connected to any networks.

Pros:

  • Impossibility of hacking.

Cons:

  • If the paper on which the private key is written is lost or damaged, the assets will be irretrievably lost.
  • Inability to carry out any transactions with assets promptly.

Cryptocurrency storage rules

For the safe storage of currencies chosen from any cryptocurrency overview, it is crucial to follow a few simple rules.

See also  No funding, no 737 Max deliveries

“Hot” wallets:

  1. Beware of phishing sites. Inattentive users may enter their login and password on such a site and subsequently lose their funds. In order not to fall into the hands of scammers, we recommend that you either enter the site address manually each time, or save it in your favorite links, but in no case follow links from search engines.
  2. Come up with strong passwords containing both numbers and capital letters.
  3. If possible, use two-factor authentication.
  4. Do not access online services using public Wi-Fi. Your data can be stolen by hackers.
  5. Do not store more than what you need for trading in online USA/EN services.
  6. When storing assets on your home PC, make sure you download verified software. It is also recommended to check your hard drive with an antivirus regularly.

“Cold” wallets:

  1. Purchase hardware wallets only from manufacturers.
  2. Always keep private keys in a safe place. Access to them by unauthorized people must be excluded.

Which Storage Method Should You Choose?

For traders or people who often use cryptocurrency online, online services and exchanges are perhaps the only way. But you need to understand that you pay security for convenience.

If you are not involved in daily trading, installing a cryptocurrency wallet on your PC is quite suitable for you. This method, on the one hand, is quite reliable, on the other hand, it allows transactions to be carried out without unnecessary manipulations.

If you are not going to access your assets at all soon, or you are the owner of a really large amount, we recommend that you turn to cold storage as the most reliable method.

See also  "Dangerous toys are easy to sell on Bol.com" | the interior

Leave a Reply

Your email address will not be published.