What is the best wallet to hold crypto?
The Best Practices on Storing Cryptocurrencies: What Wallet Should You Choose?
Crypto wallets are an essential tool for buying, trading and selling cryptocurrencies. Traders need them to store crypto securely, as well as to protect and validate transaction information.
A fundamental aspect of investing in cryptocurrencies that is so often overlooked is how to store your holdings in the safest way possible.
When you consider that you are not afforded the same level of protection as money held in a bank account, it is a good idea to take your responsibilities seriously and choose a storage option that gives you the best protection. See our coverage of the Celsius disaster: Clanz CEO & Economist Dr. Michael Kollo on Celsius
Any sort of weakness in your hardware or software defenses can be cruelly exploited and that could mean your Bitcoin is gone for good.
However, you can bolster those defenses by searching IT support Brisbane, for instance, to make sure that you have done what you can in that respect.
But what about choosing the right wallet to keep your cryptocurrency safe?
Here are the best options and practices that you need to consider.
A custodial wallet is often the default option
The typical scenario when you buy cryptocurrency through a broker or via an app is that if you buy Bitcoin, for example, your investment will usually be stored in a custodial wallet that is controlled by them.
As you might expect, there are certain pros and cons to this arrangement. Storing your Bitcoins in this way involves minimum hassle on your part and it is easy to access the currency when you want. It is also good to know that you won’t have so many concerns about losing your wallet.
However, a key point to consider is that you are totally reliant on the third party deploying a good level of security measures to keep your currency safe. There is also an element of trust. As there is a potential risk that you could be locked out of your account.
If you do decide to opt for the default option of using a custodial wallet. Do your research to ensure that you become satisfied the security arrangements are robust enough. Moreover, the provider has a proven track record for integrity and reliability.
An offline wallet option
Cold crypto storage usually involves using an offline hardware wallet. One only connected to the internet when sending or receiving cryptocurrency.
Each hardware wallet you create will have a unique recovery phrase. This is the equivalent of a password and it is vital to keep this protected as anyone with access to this information could steal your cryptocurrency.
The obvious advantage of a so-called cold wallet is that you are minimizing the prospect of your currency becoming stolen. Because hackers need you to be online to access the wallet. The fact that many platforms widely use cold wallets to protect their own holdings is testament to the security advantages attached to creating a cold storage wallet.
A hot wallet option comes with a big risk
Another option to consider would be a hot wallet. This is an online storage option. And often offered as a cost-effective solution.
The big drawback becomes the inherent risk of your account becoming hacked when it is permanently online. You should only consider this option for smaller amounts of cryptocurrency.
What is the best solution?
When you consider all of the pros and cons attached to each storage option it is clear that the most secure arrangement for storing your cryptocurrency would be to use a cold wallet.
Make sure you take great care with how you store and protect the recovery phrase associated with your cryptocurrency wallet as this is your final line of defense, regardless of whether you decide to use a hot or cold wallet.
It is important to take your security and storage options seriously if you want to ensure that your cryptocurrency investment remains protected at all times.