The method to store cryptocurrencies is a topic as important as the investment itself. Since the storage of cryptocurrencies is of vital importance, users should be extremely cautious in this regard.
Among corporate users, advanced methods with high costs are quite popular. To name a few, the companies offering HSM solutions and storage services. In addition to that, individual users can store their cryptocurrencies in a cost-effective manner as well.
Cryptocurrencies are saved on blockchain. You can make use of your assets saved on blockchain by only executing a transfer signed with your private key. Thus, if you have a private key, you can use your funds. What makes you the owner of your funds is your ownership of the relevant private key. That’s why cryptocurrency storage methods are the same as the storage methods of your private key.
The users can store their cryptocurrencies with these methods:
- Paper wallets
It is a method allowing you to store your private key on paper. You can keep it directly or with a QR code on paper. This method does not protect you from the risks of losing, wearing and being stolen via physical access. Therefore, it is not preferred that much.
- Hardware wallets
The physical hardware devices storing your private key falls under this category. Since your private key is not stored anywhere connected to the internet, this is a frequently used storage method, which is generally considered safe. It is important to ensure that you will not lose it or it will not be physically harmed. To prevent such incidents, back-up solutions are offered for using your funds as well. The mainly utilized back-up solution is recovery words. It is important that you keep these words safe and you do not lose them.
- Online wallets
All storage solutions connected to internet are included in this group. You can store your cryptocurrencies on web-mobile based wallet applications. The bottom line here is that you keep your cryptocurrencies on the application offering storage services for that specific cryptocurrency.
You can keep your cryptocurrencies on your account on the cryptocurrency transaction platform where you execute your transactions. However, you should be sure about the reliability of the platform you use. The platforms that keep your cryptocurrencies in accordance to security procedures and protocols which are always kept up to date should be preferred. The platforms keeping the assets of users in cold wallets are safer. Additionally, you need to be sure that you utilize a two-phase verification and the security measurements offered with the application at maximum.
No matter which method you use, for the security of your crypto assets, you need to take the maximum measures that the method you use allows for.