Bitcoin is on the rise once again and this does attract many new investors. If you are new to Bitcoin and cryptocurrency, being knowledgeable about how to securely store your coins is very important. In the world of crypto where everything is decentralized, being responsible for your own money is utmost important.
As you may or may not know, access to every coin’s account is controlled by “private keys”. These keys are generated when a new coin account is created. Whoever has access to these keys is the owner of those coins. Security of coins is directly connected to the security of private keys. Therefore, we will discuss how each method secures these private keys and which is the best way for you to secure your private keys.
Lowest Level - Exchange
The most common place to store cryptocurrency is no other than on an exchange. Whether it’ll be Binance, Coinbase, Kraken or many more, it is where many people buy and trade their coins. Leaving coins on an exchange is easy. There aren’t any extra securities steps you need to take or be responsible for. Moreover, it gives easy access whenever you want to trade.
However, it is the least favored method for experts and those experienced enough in the space as it is the least secure. When your coins are in an exchange, you do not have direct access to them as the private key is with the exchange. This means whenever something happens to the exchange such as the moment they close down or get hacked, your coins will be easily stolen because your private keys are with them. Exchanges have been hacked and closed down multiple times in the past and many people, having lost a large amount of money, learned to stay away from exchanges.
Somewhat Better - Mobile Wallet / Hot Wallet
It is a golden rule to be independent of any third parties when it comes to holding Bitcoins. This means it is the most important to hold on to your private keys. Due to this, many store their coins in what are called “mobile wallets” or “Hot wallets”. These wallets can be downloaded online and be used easily on your phone or PC. Users can create an account in these wallets and it will auto-generate a private key which is kept inside the wallet. You can access your wallet and private key through your password.
It is safe to a level as now you have access to your own private keys. However, phones and PC, which are online devices, are very easy to hack and have back doors. Your private keys can be easily stolen or hackers can, through the internet, remotely control your phone or PC to send away your coins. It is very risky to get your coins stolen if you happen to meet a hacker.
Honorable mentions - Paper wallets & Airgapped phones and PC
From what we see, the main weakness of mobile and hot wallets is because it is connected to the internet. An obvious and correct solution is to take the private keys offline. Due to this, some people turn to “paper wallets”. Private keys are generated and printed onto a piece of paper for safe keeping. Users usually re-enter the private key every time they want to access it. Most people use it just to save and not for daily use. Although it sounds safe, it is not very practical. It can be difficult taking care of a piece of paper as paper can decay over time. Moreover, most people like to access their coins more often than they imagine making this method a big hassle.
Another solution is setting up an old phone or a PC as a wallet and make it offline. This means your old phone or PC will now be only used to store your private keys which is safer than using normal phones or PCs. However, not everyone has an old phone or PC to spare and not to mention, setting this up and making it work, is a difficult task.
Water damaged paper wallet
Most Secure - Hardware Wallet
The best method for storing cryptocurrency is none other than storing it in a hardware wallet. It is a piece of hardware that is offline and is used solely to hold private keys. Normally it is used with an APP on PC or on mobile which takes charge of sending transactions. Once a user creates an account, a private key is generated and kept securely and offline inside the hardware wallet. When users want to access their private keys (eg. Sending Bitcoin), they can generate a transaction on the APP and “verify” with their private keys using the hardware wallet. To say it simply, hardware wallets have the practicality of a hot wallet and has the security of an offline PC/phone while not needing any computer skills to set it up.
ELLIPAL Hardware Wallet
There are many hardware wallets for you to choose from. The most suitable wallet for the modern-day traders and those new to crypto is none other than the ELLIPAL Hardware Wallet. Not only it is one of the most secure hardware wallets, but it is also the easiest to use. The ELLIPAL has a large touch screen and an easy to use UI, users will be able to get used to it very quickly. It is paired with ELLIPAL mobile wallet APP and uses QR code to sign transactions only. With just a simple QR code scan, anyone can use the ELLIPAL hardware wallet.