How Do You Store Cryptocurrencies (Wallet)?
With fiat currency like US Dollars, you can store them at the bank or in your wallet. It’s pretty straightforward. But with digital currencies, there are a few wrinkles that you need to get your head around, but the idea is similar. Let’s take a look at how cryptocurrency storage works. You store your cryptocurrencies on the blockchain in a “wallet.” This is simply an address on the blockchain. It’s like how the website address cryptott.com directs you to my website, on the internet.
Each wallet has a public address and a private address:
The public address is the address that people send funds to.
The private address is the “password” that you use to access and send your funds. Never expose your private key until you are ready to spend your funds, otherwise you will probably lose all the money in your wallet.
Now that you understand the basics of cryptocurrency wallets, let’s look at the different wallet options out there. Here are the different ways that you can store your cryptocurrency:
This is probably the easiest way to store your money. But it is also the least secure. So, it’s not a good long term storage solution, but it is fine for buying things and funding your trading accounts. Exchanges like Binance or Bittrex also have their own wallets built in.
You can download a mobile app like Breadwallet or Coinomi to store your spending money. It is more secure than an online wallet, but if your phone ever breaks or it gets hacked, everything in your wallet will be gone.
Similar to a mobile app but just for desktop computers.
Hardware Device Wallet
These are hardware devices that are built especially for storing cryptocurrency keys. They are safer than the options above, but they are still susceptible to the things that can damage all electronic devices.
You can also store your private key on paper, like in the picture above. This is the most hacker proof, but it is also the least convenient. If you are going to go this route, be sure to store them in a safe place (like a safety deposit box) and don’t actually use paper. Use something like this to make sure that your money isn’t lost to something as simple as a spilled beer.