A beginners guide to storing your cryptocurrencies
Entering the world of cryptocurrencies can be a walk in a park for some, but most of us meet certain obstacles along the way, one being where we should store our favoured cryptocurrencies. There are so many types and options but no concrete answers, hence I decided I’ll give you my personal opinion on what to use.
So you have bought the cryptocurrencies of your choice and you now have them on an exchange. Why not just keep them there? My main concern with keeping cryptocurrencies on exchanges is the security risk. Even though they feel safe, most of their track records are, well, not great to say the least. Most exchanges are unregulated and uninsured which means that when they get hacked, which they do from time to time, your currency may be stolen and never returned. A famous example is the hack of Mt.Gox in 2014 which was the biggest exchange at the time. Over 750,000 BTC was stolen and investors lost their funds with no way of refunding them. Mt.Gox later declared bankruptcy and shut down, however not all of these hacked exchanges have closed. Several of the biggest exchanges today have been hacked before, such as Poloniex and BitFinex. So if you care about safety, get your long term holds off exchanges and store them in a safe wallet. Now you might ask, what wallet should I use then?
First off, it’s important to understand that there are two different types of wallets, there are hot wallets (also known as software wallets) and cold wallets (also known as hardware wallets). Hot wallets are wallets that run on internet connected devices such as phones or computers. They are the easiest and the cheapest way to store your currencies. They allow for simple sending and receiving of crypto currencies and most won’t cost you a dime (or a satoshi for that matter).
They are easy to set up and I have a few that I can personally recommend.
Looking for an iPhone wallet? Well then I would definitely recommend Breadwallet.
Built with an easy-to-use interface, Breadwallet is simplistic and gives users full control over their private keys.
Looking for a wallet to use on your laptop or stationary computer? Then I would recommend Exodus and Electrum. Both of these offer their services for both mac and PC users. Neither are perfect in my opinion but they do their job and they do it well.
So, this all sounds great but why get a cold wallet if hot wallets are so convenient? Well, the security risk.
All these wallets are connected to the web which means there’s a risk of theft. Hackers cannot steal digital assets that aren’t connected to the internet, and cold wallet offer a safer environment for your coins and tokens.
A “cold wallet” or “hardware wallet” is a physical device. This is the safest way to store Bitcoin or any other coin since the only way to withdraw/spend the currency is by connecting it to a device such as a laptop or phone.
The most commonly used hardware wallets are;
• Ledger Nano S
• Trezor
• Keepkey
I personally use a Ledger Nano Z for most of my holdings. I along with a majority of the community agrees on this being the best all-around hardware wallet currently out there.
The Ledger Nano S is the most affordable hardware wallet that comes with a screen and it’s very easy to set up on any desktop computer. If you were to lose the hardware wallet you can recover your coins using a 24 word passphrase you receive when setting it up (If you are as clumsy as myself then I would recommend noting down this phrase on multiple slips of paper).
Ps. if you’re buying a hardware wallet make sure to get one that is bought directly from the company and not from ebay or such since there are hacked devices out there that scam buyers and steal their coins.
I hope this short article somewhat helped you decide on what wallet to use! If you have any questions feel free to comment down below or shoot me an email at [email protected]
Best regards,
Nicholas Stael von Holstein
Starflow ICO
Sources:
https://coinsutra.com/biggest-bitcoin-hacks/
https://www.weusecoins.com/bitcoin-cold-storage-guide/
https://medium.com/dash-for-newbies/cold-wallet-vs-hot-wallet-whats-the-difference-a00d872aa6b1!