The advancement of technology has given us every possible way of making our lives easier. Devices have developed so much that it allows us to transfer and exchange data and even use transaction methods. Since introducing online banking, payment methods have been easier than before and more user-friendly.
This development in different provides us a digitally controlled world that is more sophisticated and advanced. That brings us to cryptocurrency, a new payment method that people use to exchange goods and services. This is a new form of digital currency by which one can perform the transaction using an online ledger. The ledger is secured with cryptography to conduct online transactions securely.
To store your physical currency, such as cash and other money, you need a place to keep your currency securely. Just like that, you also need a secure and protected area to keep your cryptocurrency.
What is cryptocurrency?
Cryptocurrency, also referred to as crypto, is an advanced payment method that you can use to purchases goods and services online. One can describe it as a virtual or digital currency that you can use in online transactions. The ledger of a cryptocurrency transaction is protected by cryptography. This makes it almost impossible to double-spend or counterfeit or breach the system by any means.
There are several cryptocurrencies, many of which are decentralized networks that use blockchain technology. This was the data that people are exchanging are relatively safe. Cryptocurrency can also be transformed into real currency so that you can purchase goods and services.
What is a crypto wallet?
There are safety procedures and steps that you can take to protect your cryptocurrency. The most popular and best way to do it is through wallets. This is a digital safe vault that allows you to collect, save and keep your currency safely. This acts as a place for storing your currency from where you can also share, send and have transactions of crypto coins. You can say what bank is to your real currency; a wallet is that to cryptocurrency. It is equivalent to a bank but rather only in a more advanced and sophisticated manner. There are two different categories of wallets, the hot wallet, and the cold wallet.
The hot wallet
The hot wallet refers to the online wallet that one can use on internet-connected devices like phones or computers. This method is a very convenient way of storing your cryptocurrency, especially when all the transactions you will make are online. However, these types of wallets are designed to keep or use a small amount of cryptocurrency. Hot wallets consist of web, desktop, and mobile.
Although it is effortless and convenient to use, sometimes this might involves risk. As it is an online method, although rare, there might be a chance of you losing your currency. This can happen during exchanges. You can also use exchange wallets which is a custodial account that the exchange provides. This wallet is not a private key holder, and that is why you should never store your cryptos on any exchange. As it is a third-party wallet, it is better to avoid it.
Many users keep their crypto’s on the exchange wallet because they intend to swap their crypto to another coin or cryptocurrency. But most of the wallets like Exodus, Ledger provides option to swap their cryptocurrency insider them only.
The cold wallet
The other form of crypto wallet is a cold wallet which is the offline wallet. This is perhaps the safest form of storing your cryptocurrency as it is not connected to the internet through any device. Thus, this involves much fewer chances for the occurrence of accidences like being stolen. This is because the private key and the address are not connected to the internet. This usually has specially designed software that allows users to view their details and make changes without risking their private key.
There are different forms and options for storing your cryptocurrency. Depending on your choice and your safety and security needs, it is upto you which kind of tool you want to use.
The best ways by which cryptocurrency can be stored
As much as the use of cryptocurrency is becoming more popular, it needs a secure place so that people can keep it safely. Like the standard or real currency has banks as a secure vault, cryptocurrency also needs such safety.
For cryptocurrency, there are wallets specialized and designed to store this particular kind of currency. Primarily there are two kinds of wallets: hot wallets, or online wallets, and cold wallets, or offline wallets. There are few types of cryptocurrency storage devices and tools to choose to have a secure location for your cryptocurrency.
- By using Desktop Wallets– This method of storing your cryptocurrency in online storage; thus, it is called a hot wallet. However, it’s more secure than most online bases crypto storage. This is quite handy as it supports every OS. Here you can control your keys and thus your transactions without a third party.
- The use of mobile wallets -Another method of storing your cryptos is using mobile wallets. These are similar to desktop wallets as they are software-based non-custodial hot wallets. It proved to be handy as you carry your mobile all time and can access your crypto. However, some regard it as a less protected store.
- You can use Hardware Wallets– The use of hardware wallets is quite popular in storing cryptocurrency. It is categorized as an offline wallet as it does not involve connectivity to an internet-connected device.
Instead, you can describe it as a physical device to store your currency and your private keys. It eliminates the risk of losing your crypto or being compromised by any means that can happen to a software wallet. So you can say, due to this option, hardware wallets are safer and secure than software wallets.
- The use of paper wallets -When talking about offline storage methods for your cryptocurrency, paper wallets are very safe and effective. It is an offline mechanism that you can generate off of specific websites. It is a printed piece of paper that contains QR codes and privates keys to access your cryptocurrency. Although people mainly used this method back when cryptocurrency started, one can also utilize this now.
As cryptocurrency is an advanced method of payment, many are using it to exchange goods and services. So it is vital to store this digital currency safely so that you can properly access it without risk.