What are the best places to store your cryptocurrency?

The cryptocurrency market is continuously catching the attention of investors from all over the world. This industry has high-lightened itself as a mainstream investment business. High amounts of money have been circulating in the cryptocurrency market. This reason catches the attention of cybercriminals as well. Hackers are becoming more interested in stealing crypto-coins by hacking the wallets and exchanges.

  • Security of cryptocurrency:

Security in the cryptocurrency market is of concern to the traders. Or else people may lose their interest, causing a drop in crypto users. The cryptocurrency holders themselves can take numerous steps to prevent their crypto assets. One of these steps includes storing crypto-assets in a safe place that cannot be easily accessed by third parties. Management of your stored cryptocurrency can also be quite confusing. Hence, some of the best places to store your cryptocurrency are listed below.

  • Exchanges as a necessity:

Although exchanges are considered the least secure, it has been a necessity for active traders. Day traders usually need to trade coins without rest. Hence they keep the coins stored in exchanges. But exchanges have proven to be more vulnerable to hacking because of the trading volume. In 2019, hackers hacked into Binance and stole 7000 bitcoins. Because of this, investors shifted towards the use of software wallets for storing cryptocurrencies rather than exchanges.

  • Software wallets:

Software wallets somewhat proved to be more secure as compared to exchanges. Some of the popular software wallets like Exodus also provides active trade for the users. Based on differences, software wallets are broke down into two categories:

Hot walletsCold wallets  
Hot wallets are associated with the internet.Cold wallets are not associated with the internet.
It is easy to access the funds stored in a hot wallet from any other computer, device, and location.One can only access the funds stored in a cold wallet through the installed app.
The third parties can control the private keys.  Only the owners can control the private keys.
Are also called cloud wallets and are more vulnerable to cyber-attacks.Are also called desktop wallets and are less vulnerable to cyber-attacks. Because only if the hackers get access to the device, then they can access the app and funds.

For some people, Exchanges could be safer than their own devices. But if a person takes necessary measures, software wallets could prove to be more reliable than Exchanges. These precautions include maintaining best security practices, the use of hefty private keys, offline recovery phrases, multi-signature, etc. Considering the difference discussed above, one can suspect that cold wallets are much more secure than hot wallets. Therefore cold wallets refer to as one of the best places to store your cryptocurrencies.

  • Hardware wallets:

For investors concerned with long-term investment and want to store their cryptocurrencies for years, hardware wallets are the best options. These wallets have been considered the safest and best place to store cryptocurrencies till now. As the name suggests, hardware wallets are small devices specially designed to store cryptocurrencies.

Features of hardware wallets:

  • Unlike software wallets, this wallet stores the private keys on an external USB device.
  • These wallets allow users to make online payments.
  • Allow the user to trade the coins directly from the wallet.

Drawbacks of hardware wallets:

  • A hardware wallet is not convenient for active trading. It would be hectic for the day traders to deal with hardware wallets while trading the coins actively. It would be a time-consuming exchange.
  • Hardware wallets are costly. But worthy enough to be the best places to store your cryptocurrencies.
  • Most of the hardware wallets don’t support all cryptocurrencies in the market.

  • Paper wallets:

Papers wallets are known as the digital copy of your crypto assets. The reason why paper wallets are on the list of the best places to store your cryptocurrencies is that these are the coldest of wallets. In this scenario, there are prints out of private keys on paper. These wallets are easy to store and don’t require much space. It contains a QR code on paper that the user can scan to exchange funds online.

Drawbacks: Susceptible to fire damage and water spillage