With the growth of digital coins and assets in early 2021, new investors are flocking to the market. One of the first decisions these investors must make is which cryptocurrency they want to invest in. However, in addition to choosing the right cryptocurrency, you also need a place to store it.
Many experienced crypto investors or enthusiasts might know the options. But, it can be difficult for a newcomer to come to grips with the available methods. In an effort to help those who are just starting out in crypto, this guide is going to cover what makes each storage option a good choice.
Hot Wallets
Hot wallets can be quickly and easily accessed online, which makes them quite convenient. Within the overarching “hot wallet” term, there are several different kinds.
They can be downloaded to your computer or phone (software and mobile wallets), or even accessed from any device (in the case of the cloud wallets). This makes them very beginner-friendly, as well as simple to understand and use.
Of course, since the wallet is always online and connected, you should take appropriate security measures. Make sure that whatever device you are using is protected. If not, you could run the risk of being hacked.
An Exchange
Another option is to store your coins within the exchange where you can buy, trade, and sell cryptocurrency. Like hot wallets, this involves your crypto being kept online. This is a very convenient method and allows you to manage your funds much easier. So, whether you want to convert your 1 ETH to BTC, or store your crypto assets, an exchange is a popular option.
While it is very convenient, there are some potential security risks. For example, the exchange will have full control over your crypto. This makes your funds more susceptible to theft or fraud. This doesn’t mean that exchanges are not safe. But most investors would agree that using a dedicated wallet is less risky than storing all your crypto money on an exchange.
Cold Wallets
These are wallets that keep cryptocurrency offline. Thus, they are less likely to be the targets of hack attempts. When it comes to cold wallets, there are a few unique options for your crypto. Some wallets store your money and other sensitive data on a piece of hardware like a USB. They can be connected to a computer and may even have an interface, but they don’t have internet access.
A paper wallet, on the other hand, keeps your keys to cryptocurrency on actual paper. Some people will also use engraved metal or laminate their copy. Crypto keys could be written out, or generated by special software, and then printed off. It means that only you will have this information, and it is near-impossible for someone to steal it. Of course, you don’t want to lose or damage the paper, as those keys are generally your own way to access your crypto.
While cold wallets are seen as one of the safest options, they are also the least convenient. Because of their offline nature, they are not great for frequent trades as it can be cumbersome to access and unlock them. They make better sense for those who want to hold their cryptocurrency, as opposed to trading often.
In conclusion, as you can see, there is a variety of options where you can store your crypto. Of course, before ever investing in cryptocurrency, don’t forget to do your research and only invest what you can afford to lose.