The world of cryptocurrencies can be a confusing place to operate. With so many headlines of major hacks, not to mention a plethora of stories of physical robberies of cryptocurrencies, knowing where to keep your crypto loot can be a tough decision to make, especially given the wide variety of options that exist. Moreover, what you intend to do with your crypto can heavily influence where you stash it.
In order to better understand the options and which to choose we spoke with cryptocurrency expert Joseph Colón, Marketing Director of Gimmer, an automated cryptocurrency trading platform and community built as a decentralized application on the Ethereum Blockchain. This is his advice…
Storing cryptocurrencies is evolving, and it is is now moving towards people wanting to balance the user experience and convenience while keeping as high security as possible. When talking about having maximum security, the safest way to store crypto, albeit the most inconvenient and least user friendly method is on a cold wallet like a paper wallet (keys on a piece of paper). A paper wallet and it’s keys are never connected to the internet (cold) which protects you from being exposed to hacks.You should keep the paper wallet secured from the elements in a plastic ziplock, and store it in a personal safe or hidden in a box somewhere secure. I recommend using paper wallets with QR codes as it minimizes the risk of making typos and it makes it a lot more convenient when you want to import the keys and funds into a hot wallet for transfer purposes. Paper wallets are most often used for long term asset holding and when you don’t plan on moving assets for long periods because of their inconvenience.Another very safe alternative is a hardware wallet such as Ledger or Trezor and they are great because they are also a lot more convenient to use than paper wallets, especially if you transfer assets frequently. There are many applications that work offline and connect with the hardwallets, making the process of transferring assets a lot smoother while also keeping the security high.Beyond cold wallets we have hot wallets such as mobile, desktop and web/browser. These are naturally less secure than cold wallets due to being connected to the internet. However, technology such as biometrics are making these wallets a lot more secure than previously possible (especially mobile with fingerprint and facial recognition). This allows hot wallets such as mobile phones and computers to be able to offer a great user experience, convenience while also being highly secure.Speaking of convenience, people tend to use personal computers to transfer their assets to exchanges and other wallets, but mobile wallets are becoming a lot more popular with the emergence of some great applications. There are mobile wallets that allow you to keep track of all your assets and manage your portfolio on the fly, while also being “universal,” allowing you to store many different kinds of cryptocurrency on the same application. Great convenience and user experience! (For example, I’m using this new wallet called the Ethos Universal Wallet, which looks amazing and is very secure. It uses a 24-word seed “smart key” for all your assets, it requires biometric authorization and pin code in order to transfer assets.)Most people unfortunately still prefer user experience and convenience over security. Because of this, a lot of people make the mistake to store their crypto on exchanges for very long periods of time. This is very risky because you don’t actually own the private keys to the exchange wallet of your account so technically you don’t own the assets. Exchanges also get targeted by hackers every day and there is a risk that you might lose your assets if they are successful.Generally speaking I would recommend to keep large amounts of crypto on cold wallets that you store under lock and key, especially if you don’t plan on trading the crypto and are holding them for the future. There are a lot of skillful hackers out there and you can never be 100% secure if you are connected to the internet. It is better to be safe than sorry and to do as much as you can to keep your funds secure. If you are trading cryptocurrency daily you wouldn’t be using a cold wallet for that, but you can always use both, by having a hot wallet for daily use and then sending parts of the crypto to the cold wallet for long term storage at the end of the day.
As Colón demonstrates, there are many options to help keep your cryptocurrency safe from thieves. In light of this, as laborious as it may sound, old fashion paper might be your best bet at keeping your goods safe in this high tech world of advanced hackers. This seems almost reminiscent of the announcement made by the Russian government a few years ago stating that it would return to typewriters in an effort to avoid hacking. Sometimes, the old methods are the best!
In addition to Colón, The Bitcoin Mag also reached out to Roberto Addeo, the head of Crypto Community at Friendz, a startup that connects brands with their target audience using the power of word of mouth marketing. “I think that the most secure wallet solution I can personally suggest is using a hardware wallet,” Addeo told The Bitcoin Mag. “In any case, the most important thing to remember is that we are 100% responsible for our wallet and our security. It means that we can have the safest wallet in the world, but if we don’t follow the basic rules of security (for example, going on a wrong phished site), it will always be at risk.”
The idea of using a hardware wallet appears to be a reoccurring piece of advice from many experts. On top of the advice from Colón and Addeo, The Bitcoin Mag also spoke with Nabyl Charania, Chief Executive Officer of Rokk3r (ROKK), a platform where entrepreneurs partner with strategists, creatives, and engineers to build and launch exponential companies, and David Zhu, Entrepreneur-in-Residence at Rokk3r, and Founder of Arcana Wallet, an all-in-one portal redefining crypto asset management. They stated “The paradigm for crypto storage has never been more clear. In 2018 we are finally seeing movement beyond simply ‘hot’ or ‘cold’ storage. Cold storage has been the more logical solution with hardware wallets such as Trezor or Ledger and the characteristics such as friendly user interfaces and reasonable costs. However, the gap with cold storage remains being disconnected from the blockchain until the time when the storage is connected. This is a huge issue and a missed opportunity.”
They also added “The new paradigm that will lead the industry forward is 3rd party custodianship. In addition to proving ownership and secure storage of assets, a multi currency custodian platform such as Arcana allows a variety of value generating activities for the crypto being stored.”
Clearly, we have many options when it comes to where to stash cryptocurrencies. Thanks to the advice of these experts, keeping your cryptocurrency safe from hacks can more easily be avoided, allowing you to comfortably HODL.