How to buy cryptocurrencies and keep them safe – part 2

We continue the material from our last article on the popular topic – how to buy and store cryptocurrency safely.

How to safely store cryptocurrency

Once you’ve chosen how and where to buy cryptocurrency, you’ll need a place to store it. The number of blockchain wallets continues to grow, with over 50 million currently in use.
These digital wallets support a range of cryptocurrencies, including stablecoins (which are pegged 1:1 to a fiat equivalent such as the US dollar), native blockchain assets such as BTC and ERC-20 based tokens, and other standards.
Even after you have decided which cryptocurrencies you want to purchase, storing them is another important part of the process. There are dozens of storage options, each with their own pros and cons.
If you’re new to the world of cryptocurrencies, you might be shocked at the number of wallet options available to you.

How do cryptocurrency wallets work?

Cryptocurrency wallets are similar to online bank accounts. Each wallet has an address, a public key and a private key.
The wallet does not store your digital money. They are on the blockchain. A wallet gives you access to funds, an address to receive them, and an interface for making transactions.
As long as you own the private key and have not shared it with anyone, all assets in the wallet belong to you.
In the wallet, you can send cryptocurrency to friends, family, or merchants. You can receive tokens from others, see the value of your cryptocurrency portfolio, and trade between one asset and another. Some wallets also allow you to purchase cryptocurrencies using various payment methods.

Let’s look at some of the possibilities.

Wallet Type 1: Custodial Wallets
With escrow wallets, you don’t have to remember the private key. In fact, you may never see the private key. The custodian—usually a cryptocurrency exchange—acts like a bank, protecting your cryptocurrencies with military-grade security mechanisms. This is a convenient option for those who are afraid of losing their private keys (and therefore access to their digital assets). It is ideal for beginners in this field.
Although exchanges have been hacked and users have lost funds over the years, modern cryptocurrency exchanges use secure cold storage to protect funds and employ the most advanced security measures in the computer industry.

Wallet type 2: Non-curated wallets
With a non-custodial wallet, you receive a private key that you need to remember. If you lose it, you will not be able to recover your cryptocurrency funds.

You can enter the key into any cryptocurrency wallet, which will allow you to access your assets on the blockchain. This means there is no risk of losing your coins, even if you lose your phone or laptop or dеlete software – as long as you have your private key. Paper wallets have a QR code or full private key literally printed on a piece of paper.

Metal wallets are usually the size of a playing card. Your private key is engraved on a sheet of steel or titanium.
Digital hardware wallets are the most popular non-privacy wallets. These are small electronic devices that connect via USB or Bluetooth. Immune to computer viruses and malware (because they work offline), these devices usually offer additional security such as PIN codes and two-factor authentication. Your private keys are cryptographically protected in your hardware wallet and are never tampered with or copied.

These wallets are good because the risk of losing your money is minimal. Your cryptocurrencies are safe unless an attacker somehow comes into contact with your keys, or you accidentally lose your private key, or you are tricked into downloading a fake wallet that gives scammers access to your crypto funds.

Which option is best for you?

Cryptocurrencies have value. Just like your cryptocurrency wallet. Do your research and choose a solution that balances security and affordability. With the right digital wallet protecting your assets, you’ll sleep soundly and be happy for years to come.
The easiest way to start – and perhaps the most secure – is to rely on a custodial wallet with familiar password protection, which can be recreated, of course, always after identity verification.

Conclusion

Efforts by central banks to stimulate economies are causing local currencies around the world to lose purchasing power. This is another reason why cryptocurrencies can be viewed as a hedge against inflation or as a life-changing investment that can help you build wealth in a digital portfolio.