Where is the Safest Place to Keep Your Cryptocurrency?
Investors, traders, and users of cryptocurrencies have a lot to consider protecting the value they put into these new digital currencies. Aside from market volatility, one of the biggest risks to owning cryptocurrency, is potentially losing it if you can’t access your holdings or there is a technical issue, hack, or other cyber-attack.
As with fiat money, there’s never a 100% failsafe way of protecting your holdings. But understanding safer ways to store cryptocurrency, and when each method is best used, can provide some peace of mind in today’s evolving landscape of digital finance.
So, where is the safest place to keep crypto? Let’s take a look at some of the options:
Why Does Crypto Need Storage?
Cryptocurrency needs to be accessed securely in the same way as your fiat money, or other investments. The decentralized nature of cryptocurrencies means, however, you don’t have a regulated bank or investment platform to help you protect your investment.
If you own cryptocurrency, the responsibility is yours to protect your digital currencies from being lost, stolen, or incorrectly transferred.
How you use your cryptocurrencies, how you invest or trade, and how much cryptocurrency you hold will all help to determine the best place to keep your crypto.
Safest Ways to Store Crypto
The safest place to keep crypto is in a hardware wallet, not connected constantly to the internet. That said, if you have smaller cryptocurrency balances and want to be able to trade or spend your cryptocurrencies quickly, you may find yourself using other ways to store crypto, which have varying degrees of safety.
· Hardware Wallets (Most Secure)
Where is the safest place to store your crypto? The hardware wallet is invariably the answer.
Hardware wallets are a type of cold crypto wallet and are physical devices that plug into your computer. They are termed cold because when you finish transferring your crypto balance, they are unplugged and disconnected from the internet.
Hardware wallets don’t actually store your cryptocurrency, they store the keys that access your crypto. These keys are mathematically related numbers that encrypt and decrypt messages and transactions.
· Paper Wallets
A paper wallet is, in fact, a printed piece of paper with the keys used for your cryptocurrency transactions. Paper wallets have been deemed a safe method to store crypto keys because your keys, and thus access to your crypto, cannot be obtained by hackers online.
The problem with a paper wallet, is where to store it safely so it doesn’t get wet, otherwise ruined, physically stolen, or lost.
· Cold Storage
Hardware wallets, USB wallets, and paper wallets are types of offline storage and, thus, cold storage. Generally, cold storage options like hardware and USB wallets sign cryptocurrency transactions with your private keys offline. This means even if a hacker discovers the subsequent crypto transaction whilst trawling the internet, they can’t access your private key.
· Multi-Signature Wallets
Dubbed multisig wallets, multi-signature wallets add a further layer of security to your cryptocurrency storage by requiring more than one private key from more than one person. They are a method to consider for the best place to store your crypto if you want to keep it online and easily accessible or transferable, and have trusted peers who will be available to verify your transactions.
· Secure Exchanges
There have been numerous cryptocurrency exchange breaches that have lost cryptocurrency investors and traders millions. A secure exchange might not be the best place to store your crypto overall, but they are an option used by crypto owners who want very quick access to their funds. They are also a common option for less valuable crypto holdings.
Best Practices for Cryptocurrency Storage
· Understand Crypto and Blockchain
Sometimes the question is not just “Where is the best place to store your crypto?” But it’s also “How can I make sure I’m protecting my crypto?” It’s no use having the best hardware wallet or choosing the most secure exchange if you’re not adhering to the recommended best practices.
· Backup Your Wallet
Investors have also lost millions in crypto balances because they lost access to their digital keys and their wallets. If you back up a crypto wallet, per any recommendations for your software or hardware choice, then you should be able to recover your crypto holdings.
· Use Strong Authentication
The best way to protect any of your money or investments is to ensure that you use strong authentication methods for any application, platform, or website you access. Each of these mediums will have best practices and additional security features, so it’s important to pay attention and use them.
· Stay Informed
The cryptocurrency landscape, technology, and the best practices for cryptocurrency storage are all evolving incredibly quickly. Keeping informed is one of the absolute best routes to deciding the best place to store your crypto or when to move your crypto or crypto keys if risks or security breaches emerge.
· Diversify Your Storage Methods
You know the adage, “Don’t keep all your eggs in one basket,” well it absolutely applies to where to keep your crypto. Do your research, decide the safest usable options for you, and keep large balances in the safest place to store crypto.
Factors to Consider When Opening a Cryptocurrency Account
Security is paramount when choosing a cryptocurrency account. Always choose a known exchange, research its security methods, and look for recommendations and reviews online.
The next step for choosing an exchange is to consider what fees are charged and when, it varies substantially from exchange to exchange.
· Number and quality of supported cryptocurrencies for options trading
If you’re looking to trade different cryptocurrencies or want access to certain cryptocurrencies, then check the number and range of supported cryptocurrencies.
· Storage and custody
When considering an exchange, a cryptocurrency investment fund, or ETF, look into your selection’s own approach to cryptocurrency storage and custody and make sure this matches your expectations and industry recommendations.
· Customer service
The last element of this quick list to consider when opening a cryptocurrency account is to check what kind of customer service you can expect. Does the platform offer 24/7 live support, for example, as this could be critical to getting help if you do encounter a problem.
The key takeout here is that “Where is the safest place to keep your cryptocurrency?” may depend on your own due diligence as well as the security of the options available. In this new era of decentralized finance, your own research and cryptocurrency knowledge is critical to protecting your crypto assets.
- Where is the best place to store and buy crypto?Invariably, hardware wallets are recommended for the cold storage of crypto, especially when you don’t need to access your investment on a regular basis. For lower balances or funds that you use or trade regularly, good research is key to selecting the best place to keep your crypto. Research and due diligence is vital when selecting the best, or most secure cryptocurrency exchange.
- Is it better to keep crypto on wallet or exchange?Some investors and traders keep some crypto funds on an exchange when they are using them regularly. However, cryptocurrency wallets are generally deemed safer, with extra security features, than exchanges.
- How do you store large amounts of cryptocurrencies?If you have large balances of cryptocurrencies, choosing offline or cold storage options is usually best, as well as applying any additional best practices. These can include diversifying your storage methods, using strong authentication practices, and always using backup processes.
- Can You Store Multiple Cryptocurrencies in One Wallet?Yes, there are cryptocurrency wallets available that allow you to store multiple different cryptocurrencies.