The Best Way to Store Your Bitcoins

The Best Way to Store Your Bitcoins

With the rapid growth of cryptocurrencies, especially bitcoins, hacks and attacks on cryptocurrency wallets keep becoming more common too. Losing access to bitcoins is a concerning story all around the cryptocurrency world. For someone who’s concerned about losing access to their bitcoin, this guide details the different types of bitcoin wallets and which one you should really choose based on your preferences.

What is a bitcoin wallet?

The first thing you should understand about bitcoins is that they are intangible assets. You can’t hold them like dollar bills. Bitcoins are addresses encrypted in a digitized ledger known as the blockchain. When you buy coins, you get two unique keys that let you send or receive bitcoins. The first key, called a public key, is the key you give to anyone who intends to send bitcoins to you. The second key, the private key, allows you to send bitcoins to other people or convert them into FIAT currency. The private key should never be shared with anyone.

While there are more several ways to store these addresses, each of them has its own pros and cons. Security is the major issue when defining each type of wallet along with the convenience and the ease to access your coins. Read an interesting but worrying case of a bitcoin user who once lost access to his coins worth $30,000 here.

Bitcoin exchange platforms

Most of the bitcoin exchange platforms offer a service to store your bitcoins on their platform. They give you a free wallet, secured with a password you can easily access. It all sounds like a great idea. Create a free account, buy bitcoins and get a free wallet. However, there are a lot of risks that you may come across while storing your coins in a bitcoin exchange platform. Let’s get into the details.

Pros.

• Easy to Open Free Account

Many established bitcoin exchange platforms offer free wallets to their users. It’s no wonder that an exchange platform like CoinBase has issued more than 30 million wallets by end of 2017.

• Ease of Access

When you have your bitcoins stored on an exchange platform, accessing your coins is as easy as sending bitcoins. You have a password in the first place and you have the exchange platform to help you trade your coins.

Storing in a software wallet

If you are a person who does frequent payments or other transactions through bitcoins then this would be one of the most convenient wallet options for you.

• Advantage

Private keys are only stored on your device thus exposure of the key online is minimal.

• Disadvantage

High risk of losses due to malware. This is because a device can be “infected” with bitcoin stealing malware.

Storing in a hardware wallet

The most recognized hardware wallets which are secure include Trezor, Keepkey, and Ledger which are great for ensuring the security of the coins. As the coins are stored in the wallet without Internet and the wallets themselves operate offline there are very low risks of hacks and online thefts.

• Advantage

Malware can’t attack the devices easily thus the hardware ensures the security of your coins.

• Disadvantage

You have to purchase the wallets and some of them may be rather expensive.

Storing on a paper wallet

Paper wallets can be generated online within couple minutes and afterward the wallets work offline. It is rather easy to create a wallet and use one. However, you should be careful while choosing a website to generate a paper wallet at.

• Advantages

1. An anonymous way of storing bitcoins.
2. If properly secured, there is no way hackers can steal it as the wallet never appears on the web.

Disadvantages

1. If you lose the paper you lose the coins.
2. The paper can be stolen if not kept in a safe place.

to sum up…

In spite of the wide variety of methods that are offered to users for storing their cryptocurrency on you should always be careful while choosing one. For instance, if you do not keep large amounts of bitcoins in your wallet and you need to make frequent transactions the software wallets and online wallets should be fine. At the same time, you have to be aware of possible hacks and online thefts, which have been mentioned multiple times above. However, if you want to store a large number of bitcoins then for the sake of safety you need to get a hardware wallet. We hope this article was helpful for you and now you can make better decisions while choosing a bitcoin wallet. Please check out our website for more crypto oriented articles and catch up with this sphere as it is a hot topic for a while. Thank you and see you next time!