How to secure your cryptocurrencies? A beginner's guide
You have chosen the right exchange office and you have already bought your first cryptocurrency. Do you know what your next step should be? You must know that keeping more cryptocurrencies in the wallet of a cryptocurrency exchange office or exchange is not the safest solution. The next step after buying more cryptocurrency should be transferring it to another, external wallet.
Storage of digital money
Just like traditional money, cryptocurrencies can be stored in several ways.
Cryptocurrencies, despite being digital money, can also be stored on physical wallets, e.g. a USB wallet. Cryptocurrency wallets are divided into several types:
Online wallets known as hot wallet:
- digital wallets on the stock exchange websites are by far the least secure form of storing our assets. In such a place, we should only keep funds intended only for trading on a given exchange. Each larger amount should be transferred to other wallets.
- software wallets – these are wallets in the form of applications for a computer, smartphone or as a browser application. Wallets of this type provide only moderate security. The threats here are viruses or other malware on our computer, or the imitation of fake applications as real ones.
If we want to use this form of wallet, we must attach great importance to security on our computer or smartphone. The main advantage is the speed of transaction execution – e.g. by scanning a QR code from another user’s application. Unlike traditional bank payments, the transfer of funds between users takes place without the involvement of third parties such as banks or post office.
Offline wallets called cold wallet:
- hardware wallets (USB) – a wallet resembling a traditional USB flash drive with encrypted data. You can access it using a fingerprint reader or by entering a PIN code. It is also one of the safest forms of cryptocurrency storage and, what’s more, it is unobtrusive, but just like in the case of a paper wallet, we must always have it with us.
- paper wallets – it is a traditional piece of paper with written public and private keys. The safest form of cryptocurrency storage, as long as we do not lose this piece of paper. The disadvantage is the more difficult way of making a transaction, because every time we want to execute it, we will have to pull out a card (and therefore have it with you).
What should you know about software portfolios?
Software wallets are one of the most popular solutions. It makes it much easier to store and transfer cryptocurrencies compared to a paper wallet or even in the form of a USB key (we don’t have to have it with you). The advantage of having quick access to your funds also has the disadvantage of less security. However, if we do not store more cryptocurrencies there (one that we would not be able to accept losing) and we keep security measures, we should not be afraid of them. However, common sense is recommended when choosing such a wallet and focusing on a few of the most popular ones that need to be verified beforehand.
It’s as easy as BLIK!
Sending a cryptocurrency from Wallet A to Wallet B may seem complicated, but nowadays it is just scanning the target wallet’s QR code and entering the appropriate amount. Hence the popularity of this type of wallet – they are simple and resemble the use of electronic banking.
Important thing – can I send my cryptocurrencies to anyone?
Be careful what wallet you send, what cryptocurrency, because you can lose it! Most wallets have protection against such a transaction, but it is worth checking in advance which wallet we are sending the cryptocurrency to (what is the cryptocurrency of the wallet). If anyone publishes a wallet address, they usually do so along with the name of the cryptocurrency assigned to that wallet. In short, the idea is not to send eg Bitcoin to the Ethereum wallet and vice versa. The exception here is wallets that support several different cryptocurrencies. As before, information is important here. As in the payment gateway, we have supported banks, and in the case of cryptocurrencies, we have digital currencies.
What if I don’t know what cryptocurrency the wallet is for?
Each cryptocurrency has its own specific wallet address that you can check. For example, the address of a wallet intended for Bitcoin begins with the number 1 or 3. In the next post, we will present the most popular cryptocurrency wallets.