3 Min Read | May 31, 2021
Dear Convey Warriors,
Imagine you wake up one day and gain access to Alibaba's cave.
Would you be excited? Or would you freak at the thought of keeping it safe?
I am sure the safety factor would cross your mind at some point in time.
When it comes to assets, security is the most important. For financial assets such as shares and mutual funds, you have your demat accounts.
But, what about cryptocurrency?
Where can you store your crypto investments?
Let us be honest and address the fact that if cryptocurrency is breaking the price record since 2020, then the scams surrounding it have also surged!
You can read one of our previous blogs on fake Elon Musk giveaways to get an idea of how unsafe the crypto world has become in recent times.
If you end up losing your cryptocurrency to any fraud, then possibility of retrieval is very gloomy! So, keep them safe with the help of a cryptocurrency wallet.
Now, what is a cryptocurrency, or rather a Bitcoin wallet?
Is there a wallet that can hold all cryptocurrencies?
How do you even use a Bitcoin wallet?
Here is a guide on how to store Bitcoin or any cryptocurrency in a wallet!
Dear readers, let us get started with the basics.
In simple terms, a cryptocurrency wallet is a digital wallet where you store all the codes that are used by you to access the set of cryptocurrencies you own. For each token (of any cryptocurrency) you have a set of codes or keys that act as its password. These keys or passwords are nothing but a long string of alphabets and numbers that provide protection against any unauthorized access.
Please take note of an important point here – without the respective key (or the password) of the token, you cannot access or sell it.
Finally, the entity where all these keys (passwords) of tokens are stored becomes the wallet. A few examples include Ledger, Trezor, Exodus, Bitwala, Coinbase, etc. The logic behind storing any cryptocurrency is mentioned below:
Any digital wallet used to store cryptocurrency can either be web-based or hardware-based. It can even be on your mobile device, your computer/laptop, etc.
You must be thinking about how safe is any digital wallet?
Can they guarantee security against all sorts of frauds taking place in the cryptocurrency world?
Practically speaking the degree of safety provided by any of the digital wallets depends on how well you organise and manage the same. It is now time to move to the next section and see how to store cryptocurrency offline or online.
In the section above, we already established the fact that a digital wallet is a way to ensure the safety of your cryptocurrency. So, let us explore the type of wallets that serve the purpose!
There are two broad categories of cryptocurrency wallets.
Considered the safest option for Bitcoin (other cryptocurrencies too) storage, cold wallets are digital wallets that require no connection to the internet. Well, it is this fact, which makes it the safest because being unexposed to the internet world the level risks get minimal.
The devices or the cold wallets have encryption of codes that provide an extra layer of security. Cold wallets are easy to use as you only need to store your address and the private keys on a device that does not require an internet connection for access (even while you are viewing your portfolio). Example - paper wallet.
Opposite to cold wallets, they function when connected to the internet or run-on devices that are connected to the internet such as your mobile phones, laptops, etc. They are convenient to use owing to easy access and transactions.
This is why they are mostly used by retail cryptocurrency investors. Being connected to the internet, a certain level of vulnerability regarding security comes into the place. Example - cloud wallet.
Although there are a handful of cryptocurrency wallets available, there are four major types. Explore them below.
Since the hardware wallets such as Trezor and Ledger are considered to be standard options you should keep them at the top of your list.
Now if you are wondering how to set up a hardware wallet, then let me tell you it’s not rocket science. A step-wise process is given below to keep you sorted.
This completes the process and you are ready to receive or send your cryptocurrency!
With the increase in the popularity of cryptocurrencies, many options of digital wallets have come into existence. Therefore, if you are looking for the best multi-cryptocurrency wallet or the best Bitcoin wallet, then you might end up confused.
The trick is to focus on your portfolio and investment requirements and then choose the wallet. For instance, investors who are beginners in the cryptocurrency world can go with convenient options like Coinbase or Exodus, whereas if you do want to take an even minute risk with the security of cryptocurrency storage then hardware wallets are good for you.
Note: The section above is not a recommendation or advice from our side.
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