Cryptocurrency storage wallets act like bank accounts. They hold balances and record transactions. Each cryptocurrency has its own wallet. It is not possible to send digital currency to a wallet that does not belong to the same blockchain. If that were to happen, the funds would be lost. The management of these wallets is not complicated at all, but that does not mean that security should be overlooked. Kimberly Rosales, an expert in the crypto world, explores certain measures that can be taken to securely store crypto assets.
Many tend to say they store their cryptocurrencies in a wallet, but they are simply adding a line to a ledger. Cryptocurrencies never leave the blockchain. They are simply allocated to different wallets depending on the transactions made. Thus, it is possible to send cryptocurrencies to a wallet that has not yet been generated or is not connected to the Internet.
A wallet is made up of at least two elements: a public address and a private key. Your public address is similar to your name. It’s an identifier you can use to communicate with others so they can send you cryptocurrency. Your private key acts as your password. The private key is used to move funds into the wallet.
Rosales warns that there are many people who will ask for your private keys. She suggests that you know that your private keys should not be given to anyone. Anyone, site, or software that claims otherwise lies to you and wants to steal your money. Your wallet and funds will be read if you give out your private keys. You may lose your ability to retrieve them.
Online wallets make it easy to access your cryptocurrencies. You can access them anywhere, and they allow you to manage your cryptocurrencies from any device at any time. This could be an exchange such as Binance, or a specialized platform such as Blockchain.info.
The advantage of the exchange is that it allows for a high level of reactivity in regard to the sale or purchase of cryptocurrency. If your tokens and cryptocurrencies are stored in an external wallet, which is not an exchange, you will need to first transfer them to an exchange to be able to resell them. You won’t be able to sell your tokens or cryptocurrencies quickly and impulsively and you may have to waste time transferring funds.
Platforms that function as wallets do not make the users the real owners of the funds. Your private keys will be dependent on the site where your money is located. It is impossible to stop it from being shut down or hacked. This is because there are no regulations and laws in the cryptocurrency world. To limit risks, it is highly recommended that you distribute your funds across multiple platforms and support services.
“We may also notice other drawbacks when using exchanges,” adds Rosales. “Transfer fees can often be very high to withdraw funds, and it is important to respect withdrawal limits.”
Rosales explains that some platforms might block withdrawals if you don’t have your personal data (KYC), and this can cause confidentiality issues. These platforms are recommended for short-term operations, and small amounts.
You can store your private keys on any device using the Office wallet. The wallet then allows you to interact directly with the blockchain. The system doesn’t require personal information. You have complete control over the cost of any transfer. You are the sole owner of your cryptocurrency.
There are still some issues with these wallets. The first is that the medium in which your private keys are stored is still susceptible to hacking. Hackers can steal your private key if your computer gets hacked.
On the other hand, cold wallets are wallets that do not connect to the Internet. This provides the highest level of security to a wallet since it is not connected to the Internet.
You can also create a paper wallet offline. Next, you will need to write your public and private keys on the media that you have saved. The wallet will be able to receive the coin you have chosen without having to be connected to the Internet. This wallet is the best way to keep your cryptocurrencies safe. This wallet cannot be used to send outgoing transfers.
Hardware wallets allow you to store different private keys (at least one for each supported cryptocurrency). They are often compared to digital safes. Ledger Nano S wallets and TREZOR wallets are two of the most well-known hardware wallets.
These wallets allow transactions to be done in full security, unlike the paper ones. You can even use a hardware wallet without compromising a computer infected by malware. Not all cryptocurrencies work with these hardware wallets. This wallet is the best for cryptocurrency users.