The learning curve when investing in cryptocurrencies can be steep, but an important question before you begin is how to keep your money safe. Obviously, as with any other investment there’s no way to guarantee a return or prevent a dip. However, there are safeguards crypto investors should take to prevent a loss to hackers. The first step to protecting your cryptocurrency is transferring it from the exchange to a crypto wallet.
What is a Crypto Wallet?
A crypto wallet stores private and public keys used to access cryptocurrencies. These wallets can be software or hardware such as a jump drive. The private key is the private pin used by the crypto holder on all transactions as a sort of digital signature. Since crypto wallets store both the public and private keys, it is important they operate at the highest level of security.
Crypto stored in a private wallet continues to reflect the market gains and losses. Like a gold bar which still gains value over time, even if it’s held in a safe.
Picking the Best Storage for your Needs
There are countless crypto wallets on the market, and each crypto investor should do research before selecting the right one based on their needs. Here’s a quick explanation of some of the options out there.
You’ll need to look at whether you’re interested in hot or cold storage. Hot storage is a wallet which is always connected to the internet. This is a good option for someone who is constantly active in the exchange.
Meanwhile, cold storage is fully offline. The wallet is hardware – typically a jump drive or small handheld device which allows for transactions without the user’s keys being exposed to the internet. Obviously, this is the most secure option since it keeps the private key far away from potential hackers.
Don’t forget your Private Key
One thing to consider when researching types of wallets is custodial versus non-custodial wallets. A non-custodial wallet means you have sole access to your wallet. This is added security, but this also means, if you forget your key or lose your hardware you could lose your cryptocurrency. In a custodial wallet, they will help you access your wallet.
Tips for Extra Security
Here are our final tips to ensure a secure crypto wallet. As with any financial account, monitor for irregularities regularly, if not daily. Opt for wallets with two-factor authentication. When using cold storage, utilize a fireproof safe or safety deposit box to ensure your cryptocurrency is secure at all times.
Note: Evolve Bank & Trust does not currently offer any cryptocurrency services.