Cryptocurrency Wallets | How To Store Your Cryptocurrency Safely
How to store your cryptocurrency coins and tokens safely is a vital topic for everyone in the cryptosphere.
Throughout the history of crypto, we have repeatedly seen that storing your coins and tokens on an exchange is not only unsafe, it is irresponsible. The fact is, cryptos were specifically designed to be decentralized, meaning only YOU control your money. Leaving your crypto on an exchange, or other public platforms are akin to using a bank or payment platform like PayPal where you can find your money gone in an instant as someone will always have access to those wallets besides you.
If you store your crypto in a private and secure software, hardware or paper wallet, you will have no worries. The only theft of crypto that was not the result of bad security (someone giving a scammer their crypto or private keys) was when an exchange was "hacked". However, as we have seen, those "hacks" are almost exclusively not true "hacks"; but, instead, it was the owner, or owners, of the website involved stealing those funds for themselves, while pretending to also be victims.
Once upon a time Mt. Gox, the largest, most trusted exchange at that time, suffered such a "hack"; resulting in a loss of 650,000 Bitcoins. Thousands of users who were storing crypto on Mt. Gox lost everything. And, while there are law enforcement agencies and private firms/individuals constantly monitoring those stolen coins through the transparency of the blockchain; it is unlikely that any of those losses will ever be restored to their rightful owners. This has happened with several other exchange sites since; and, will surely happen again as long as people are willing to use such unsafe methods of crypto storage.
So, how do you store your crypto safely?
The cheapest, and in our mind, most secure is a paper wallet. There are methods with each crypto (for tokens use an ERC20 compatible ETH wallet) to print out a paper wallet. This gives you a paper copy of your funds, locked into a set of unique public and private keys. Once printed, your funds, as well as the recordation of those funds at the time of printing, are forever locked into that wallet; until such time as you use the private key to send your money elsewhere. It is essential that you store your paper wallets in a place, like a fireproof safe or lockbox, where those funds will remain safe from harm or physical theft. As long as you alone have access to your paper wallets your funds are safely under your control.
Then there are hardware, or cold storage, wallets. Such wallets store your coins and tokens offline, thereby shielding your wallets from being hacked. These hardware wallets are basically a zip (or thumb) drive that is programmed with a software wallet to contain cryptos. Some are designed to hold a single type of crypto, some hold a wide variety. The key to hardware wallets is to never leave your wallet connected to the computer, especially if it is online. Trezor and Ledger Nano are two of the most popular hardware wallets; but, in order to determine compatibility with your needs and existing computer setup, you will need to do a bit of research to figure out which is best for you.
Finally, there are a number of secure software wallets. BitPay is an excellent app that stores your cryptos on your device. It offers storage and instant use of BTC and BCH. Blockchain. info also offers a secure system for storage of BTC, BCH, and ETH. For dedicated storage of ETH, and the huge variety of ERC20 tokens, MyEtherWallet is the most dependable software option. Using MetaMask (a Chrome Extension) you can connect your MyEtherWallet to make trades and payments while keeping your ETH, and ETH-based tokens, safe.
Regardless of how or where ..
... you decide to store your cryptos the rules are the same. And, the # 1 rule of crypto is that we NEVER, ever, for ANY reason, store our crypto on an exchange or platform where we are not in complete control. The only exception is when you want to make a purchase or trade. In those cases you only transfer enough crypto into the platform of your choice to cover the deal at hand; make the deal, and get your funds out. Following that rule, and keeping your cryptos safe in a secure paper, hardware or software wallet at all other times, you will always be in control of your money; and that is the entire point of cryptos; giving you control of YOUR money.
Good luck in your trades; and, Happy HODLing!!!