The way of keeping Bitcoins and altcoins properly, methods of cold storage and hot pockets as well as advantages and disadvantages of different types of wallets: web, desktop, mobile, paper, hardware
If you are thinking through the process of buying any type of cryptocurrency, you may be wondering where to keep it once you’ve done so. This article is going to provide an information on many ways of storing Bitcoins and altcoins as securely as possible. Remember, if your crypto is lost or stolen, then there will be almost nothing to be done to get it back...
Before you buy Bitcoins and any other currency, you should know how to keep them. You can store your assets via different wallets. A wallet does not literally contain your coins, it rather stores your data, your address in the bitcoin network, that references your entire transaction history. The wallet itself serves as a portal to your domain.
There are two types of wallets: hot pockets and cold storage. A hot pocket is a wallet that is constantly connected to the Internet. While it is easily accessible and handy, it opens possibilities for attackers and hackers. Cold storage wallets, though harder in managing, are a safe place to store your bitcoins because they are offline, and malicious persons have no way of hacking them.
Here are the five most common ways of storing bitcoins:
- web wallets
- desktop wallets
- mobile wallets
- paper wallets
- hardware wallets
Web wallets are provided by websites. There are many wallet websites that make sending and buying coins easy and intuitive. Creating an account on an exchange or a trading platform usually generates a wallet for you. It is not advisable to store large amounts of coins in these wallets as you will have to trust a third party to keep all your essential data safe. Web wallets are also used for day trading as you always have quick and easy access to your cryptocurrencies.
Desktop wallets are free downloadable programs (clients) for your computer. The degree of their security varies as they can be both online and offline. Your wallet information is stored in a file on your computer. Usually, these wallets are safer because you do not have to transfer your private keys to a third party. However, this also means that if your computer gets stolen or destroyed and you have not backed up your wallet, you are likely to lose your assets.
Mobile wallets are apps for your smartphone. They usually work similarly to desktop wallets. If you use cryptocurrencies as an everyday payment method, you may want to get a mobile wallet. Apps make it much easier to pay for goods and send coins on the go. However, mobile wallets are not very secure and private as they are usually tied your phone number and can track your geoposition.
A paper wallet, however surprising it may sound, is just a piece of paper with your public and private keys printed or handwritten on it. It is a very safe place to store your Bitcoins since paper cannot be hacked. However, paper wallets are easy to lose, they can be stolen or accidentally destroyed.
Hardware wallets are special devices that store all your wallet data. They are used by big investors as this is believed to be the safest place to keep coins. They look like pen drives. Most of them require you to set up a backup seed phrase to be able to retrieve your funds even if the hardware wallet gets stolen or destroyed.