Stefan Thomas has $280,000,000 worth of bitcoin. Unfortunately, he forgot his password and had two guesses before he was locked out of his funds and lost it forever. He has made peace with the situation. This article will explain how to store your cryptocurrency to avoid such a situation.
Ways to Store Cryptocurrency
There are different ways to store crypto. The easiest way is to keep it right on the exchange you purchased. Exchanges such as Coinbase allow you to buy, sell and manage your crypto right on the platform. Another option is using financial apps like PayPal and Robinhood. These exchanges and financial apps hold on to your private key. You don’t have access to it, which means you have to trust the platforms to keep it safe for you. You may not want to store large amounts on the exchange.
To have full access to your private keys and, in turn, your funds, you need a wallet like your personal wallet.
What Is a Crypto Wallet?
When you buy a cryptocurrency like Bitcoin, it gets stored in a wallet and has a private key associated with it. The private key is like a password, a long string of letters and numbers assigned to your crypto wallet. So if you want your coins to stay safe, you need to keep the private key safe.
Wallets to Safely Save Crypto
Like Elon musk said, ‘any crypto wallet that won’t give you your private keys should be avoided.’ For more control and safety, you should store your private keys on:
It is the traditional method where your private and public keys are printed on paper. It’s a means to store and access your cryptocurrencies when you’re not connected to the internet.
Your keys are deleted from the cryptocurrency network when you print, but the tokens remain; nonetheless, they are inaccessible without them. A paper wallet can be kept in a safe box at a bank or home.
It is a type of hot storage crypto wallet. The private keys are saved in an app, software, or online in these wallets. This enables you to send, receive, and spend cryptocurrencies the same way you would an online bank account.
Software wallets are categorized into:
- Desktop wallets
- Mobile wallets
- Online wallets
If you are a long-term investor and the safety of your funds is important, a hardware wallet may be the best choice. A hardware wallet is a cold storage wallet crypto device. It offers the highest grade of security and prevents theft.
Companies like Trezor and Ledger make special drives, especially for crypto wallets. The good thing about it is that many online wallets like Guarda integrate with hardware wallets. So it can allow moving your funds from the hardware wallet to the online wallet and vice Versa.
What matters is that whatever option you choose, your private keys are, and wallet passwords are secure. You don’t want to lose access to your funds simply because you misplaced your keys.