Where to Save Your Cryptocurrency: In the same way, fiat money can be stored in a safe, a bank, or some other financial institution, there are several ways in which cryptocurrency can be securely tucked away.
On a foundational level, virtual assets are generally stored on the blockchain but depending on the digital wallet, the level of security may differ. Before we consider the various options there are when storing cryptocurrency, let’s take a look at the 2 main types of crypto wallets available;
These are wallets that are constantly connected to the internet, to access the funds you have to go online using a device such as a phone or a computer. This particular feature makes them very convenient but it also means they are not as secure as their counterparts; cold wallets.
Generally acknowledged as the safest storage option, these are wallets that safe-keep the user’s address and private keys offline. They are typically accompanied by software that allows an individual to view their assets information and make alterations without an internet connection.
If your goal is to actively trade cryptocurrency, storing your assets on a crypto exchange is unavoidable. However, it is generally not advisable, the reason for this is that a lot of exchanges are custodial wallet providers. This means that the user does not retain the private keys to their wallet account, instead, a third party does.
A single exchange may be responsible for funds from thousands of users and this makes them a prime target for hackers. Most platforms use hot wallets, however, there are a few that support cold storage. Additionally, some exchanges; decentralized exchanges allow users to hold on to their private keys.
There are 2 major types of software wallets;
Desktop wallets are typically non-custodial hot wallets. They can be installed on a wide range of operating systems and are relatively secure as the user is responsible for the safekeeping of their private keys.
Mobile wallets work similarly to desktop wallets except they operate on smartphones making them much more convenient as mobile phones are easy to transport.
This is the most secure option as it comprises a physical device that holds the user’s cryptocurrency and private keys. Hardware wallets use offline storage which eliminates the risk of a hack, the downside is that they can be expensive and difficult to set up. They do, however, make a great choice for long-term holding.
Crypto Savings Platforms
While they are often custodial, these platforms are a great option as they implement stringent security measures or even offer cold storage. The best benefit is that they allow users to make passive income on deposited funds. Additionally, some platforms such as BitcoinZtech run affiliate programs through which users can earn more by making referrals.