5 Ways of storing your crypto
Cryptocurrency by itself does not have a physical form, so where and how do you store it? Well, in this blog we take a look at how and where you can store your crypto.
Crypto itself lives online on the blockchain. Its digital presence thus also asks for a digital storage method. These storage methods basically all just store the private key of your Bitcoin address. That is basically the password to your crypto. But how and where you store these private keys can determine the security of your coins. Because if you would leave them out in the open or exposed to hackers they could steal your coins.
Taking ownership of your own coins and tokens is therefore very important. And storing them in the right place will benefit you. That is why we go over the 5 main ways of storing your crypto and their pros and cons.
To learn about blockchain ownership click here.
Securing your crypto
No matter where you keep your crypto stored as long as making sure it is safe is always of utmost importance. That is why you should always make sure that your digital environment is also secure and not invaded by others.
With simple tools like virus scanners and VPNs on your computer and/or phone you can already hold many foes that could cause harm. Also reading more about crypto scams like wallet scams or phishing emails can protect you against these attacks. Because knowledge equals security in this case.
And always try to keep your crypto wallet software up to date and activate things like 2fa on your custodial accounts.
1. Software wallet
One way to store your crypto is on a software wallet. Most people that hold custody over their own crypto, keep it in a software wallet. With many popular wallets like Math, Exodus, Metamask, and SimpleHold taking the lead and pushing for the adoption and use of cryptocurrencies.
Software wallets like these usually exist on your internet browser, desktop, or mobile phone. Using one of these crypto wallets makes it quite easy to transact with and also use Dapps. When it comes to connecting to Dapps or making simple blockchain transactions. Software wallets seem to be preferred because of their ease of use. And the fact that you are in full control of the funds on it.
Because you hold all the control with a software wallet, you should make a backup. So that if you would lose control of the wallet you would not lose your crypto.
2. Hardware wallet
A hardware wallet is one of the ways you can store your crypto securely and offline. Without anyone having to watch it for you and control your funds. A hardware wallet usually works as a physical device or plate that holds your private keys. Because a device like this is physical it does not have to be connected to the internet all the time and can just be used for signing transactions when needed.
There are many different hardware wallets out there. So make sure that if you buy one, you buy one that is trustworthy. And never buy them second-hand as the previous owner could have saved the private key somewhere and thus access your funds when you put some crypto on the device.
Holding your crypto on an exchange is something most people do, especially people new to crypto. Although many of the popular exchanges like Binance, Kraken, and Kucoin all have strong security measures and insurances. Keeping your coins on a crypto exchange can still bear risks. Because these exchanges work with constant inflows and outflows of crypto and API systems. The chance that they get hacked is always there. Especially because they hold a lot of funds.
However, if you do not know yet how to use your own wallet or if you like to actively trade in crypto you could keep it on an exchange as it might be of more use for you there. Or in some cases even a bit safer. But keeping your coins on an exchange does not give you full control of your keys. So using DeFi, and other Dapps might not be an option for you then.
Besides that most crypto exchanges do not offer you a yield on your coin or a much lower yield than interest accounts or DeFi protocols.
4. Interest account
Crypto interest accounts like NEXO and Coinloan focus on getting the highest yield for users by collateralized lending. This means that they lend out your crypto to people who put up enough collateral. This as a result returns you with a crypto interest (some sort of dividend). On crypt interest account the yield is usually higher than on exchanges that offer your a yield.
This makes them an interesting option for storing your crypto, and in some cases also fiat currency. With crypto rates varying between 4-8% and fiat yields often between 6-12%.
Although crypto is mostly meant to be used on-chain. If you do not use it at that moment and save your crypto up as a form of savings. Then earning interest on your Bitcoin or other cryptos might be nice. But if giving away your crypto to another party might not be of your preference you could also try to get a yield in DeFi applications by using your own wallet. Which you can even do with Bitcoin Defi.
5. On paper
The last and also least popular way to store your crypto is on a piece of paper or a paper wallet. A paper wallet basically is your private key written down somewhere. This way it will be impossible for anyone to hack your wallet as it is just on a piece of paper. However, a wallet like this is always at risk of being destroyed. So a backup of it will also be necessary.
With a wallet on paper, you can easily hide it or store it away if you desire. But it works rather uncomfortable. So if you really want to keep your privacy and coins offline, you can better use a hardware wallet instead of a paper wallet.
Keeping your privacy with a crypto wallet
When using crypto privacy is always of key importance. Not only because people can track many transactions on the blockchain. But also because you might not want your transaction or purchase history to be out there to see for everyone.
To prevent this you can use more private ways of transacting but you can also make sure that your wallet stays (more) private. To do this you could use a VPN when transacting. Or switch between wallets once in a while so you do not have all your transactions linked to one address. This will help already a bit with making your blockchain activity more private. But you could largely improve it by using privacy services as conjoins, etc.
We hope this blog taught you where and how you can store your crypto tokens. What way you choose to use is completely up to you and your needs. Just make sure that you keep your crypto always private and secure. So no bad party can access your digital assets.
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