How to Store Cryptocurrencies Safely

One of the most important topics in the universe of cryptocurrencies is security, and specifically, security when storing bitcoin or other cryptocurrencies. It is also one of the most talked about topics on a daily basis due to certain important differences compared to what we’re used to with traditional currencies or actions.

In this article, we’ll discuss ways to store and store cryptocurrencies. We’ll discuss the advantages and disadvantages of each method and key aspects to take into account to avoid losing our capital. Most people who have lost their cryptocurrencies have been mainly due to failures of simple neglect or mere ignorance. The objective of this article is to avoid precisely that.

The main factors to be taken into account for the analysis will be:

  • Security
  • Responsibility

Before we start, we would like to clarify that there is no perfect method to store cryptocurrencies. At least not for the moment. It will depend to a large extent on the person and the situation. In general, the idea is to have several wallets depending on the use that you want to give each portion of the estate. Just as a person can have his traditional heritage divided between accounts of different banks, a safe at home and a physical portfolio for the money he’ll use during his day today, in the world of cryptocurrencies works more or less the same.

Types of wallets:

  • Web wallet
  • Desktop wallet
  • Mobile wallet
  • Hardware wallet
  • Paper wallet

On the other hand, within the web category, we could include the majority of exchanges, since, in addition to their operation is very similar, they are widely used by most people to store, since they are usually the gateway to the universe crypto; is where you usually buy bitcoin or exchange other cryptocurrencies. Within the web category, an exchange is one of the least secure options for storing long-term cryptocurrencies, since they tend to be the target of the majority of hackers, due to the large amounts of capital they accumulate and the number of movements they make daily.

As far as possible, we recommend never leaving large amounts of capital in the exchanges. There are many cases of theft or loss and often they can’t do anything to get it back. The exchange should be used only for what is designed: exchange cryptocurrencies. Once done, we’ll send our cryptocurrencies back to another type of wallet. If you work in trading, transferring the capital to other wallets can complicate the operation and add costs for commissions, but not doing so implies more risk.

We are used to using thousands of passwords in our day to day, on the internet, in the Gmail account, on YouTube, on Facebook, on Instagram, on the bank’s website, etc. And we are also accustomed to always have on hand the “recover password” button that allows us to create a new password at any time and access our favorite applications.

Well, here there is NO password recovery button. If you lose the private key, you’ll lose access to your funds forever.

To look for a simile that serves as an example today, it is as if we decided to store our funds in the safest safe on the planet, which can only be opened with a unique password that only you know. If you lose that key, your funds will still be there, but nobody will ever be able to access them and you will never be able to use them either. So, for practical purposes, it is as if you had lost them.
As we anticipated before, there is no perfect wallet. It will depend a lot on each one, on the situation and on the use that we want to give to those funds. For those who want to make short-term trading, it does not make sense to constantly use a physical portfolio like Ledger Nano, nor is it worth having the funds in an online wallet or web wallet if the intention is not to touch it for more than a year.

To give a real example, we usually have the most important part in physical portfolios such as Ledger or Trezor, something less important in a desktop wallet such as Exodus or a wallet in the phone as Jaxx for transactions or accessible payments in the day to day and finally, if we want some cryptocurrency that we do not have, we send bitcoin to an exchange like Binance, we make the change and then send that new cryptocurrency to Exodus or Ledger Nano.

By way of summary, if we order them based on the 2 initial criteria (Security and Responsibility) from most to least, they would be as follows:

Security

  1. Hardware wallet
  2. Paper wallet
  3. Desktop wallet
  4. Mobile wallet
  5. Web wallet

Responsibility

  1. Paper wallet
  2. Hardware wallet
  3. Mobile wallet
  4. Desktop wallet
  5. Web wallet

If the cryptocurrency in question that we want to store is not supported by any of these wallets we can always go to the OFFICIAL website and download the official wallet they offer. I emphasize the official because the number of malicious portfolios is very large nowadays. Once we have downloaded the wallet and saved the seed, we can always uninstall the wallet without problems and reinstall it in the future, since the coins are actually stored in the blockchain and not in our computers. As long as we have the private key we will always be able to recover them.

In the end, it has to be a decision of each one where it considers that it has its strong points if you think that your safe is perfectly reliable ahead, if on the contrary, you trust more of your password manager, you could have the private key stored there and not on paper.

What wallets are you using? Do you know any better option? Have you had any problems with any of the options mentioned? Share your favorite wallet with us in the comments!

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