By
Temitope Olatunji
April 18th, 2024
No matter how deep you’ve immersed into the crypto sphere, if you hold at least some of the digital assets, it’s worth to know how to properly store your funds. Check out all the ins and outs of today’s storage alternatives in this post.
Whether you’re new to crypto or have been in the space for a while, you’ll have come across the issue of how to store your coins and tokens. Fortunately, there are a number of methods available for storing your crypto including hot wallets, cold wallets, and even bank custody accounts, such as those provided by EQIBank.
Hot Wallets
If you have a wallet that is connected to the internet, it’s a hot wallet. There are numerous hot wallets available, including the highly popular MyEtherWallet. Some have more functionality than others, and some offer ways of storing the usual suspects like BTC, ETH, XRP, etc.
Since hot wallets are connected to the internet, they are the most vulnerable to hacks. In fact, one of the most common hacks is a keylogger that records every key you press on your keyboard, which is less than ideal if you are typing in your private keys to access your wallet. Worse still, there is malware that can copy whatever is on your clipboard, so say goodbye to copy/pasting your private key.
Potentially worse still is leaving your money on an exchange. There have been multiple exchange hacks that have lost user funds, potentially the most famous of these being Mt. Gox.
Never leave your funds on an exchange unless you are actively trading.
Cold Wallets
So, forget hot wallets unless you’re storing your pocket change. Cold wallets are far more secure, and there are a number of them to choose from.
Paper wallets are often cited as being one of the best methods, but there are plenty of arguments against them. Although, if you can eliminate the risk of physical theft, floods, fires, coffee spills, and children who like to scribble on things, they are as safe as the cash you have in your regular wallet.
Hardware wallets are potentially the choice du jour in the crypto community for the safest method of storage for coins and tokens. You’ll almost certainly have heard of Ledger and Trezor already, but if not, they are devices that you connect to your computer with a USB connection. You can transfer your coins and tokens to the device, which is then disconnected, completely removing them from any internet connection.
Custody Accounts
One of the more exciting and newer methods of crypto storage is custody accounts. A custody account is simply where a bank stores your assets and offers protection against theft and fraud among other things. Currently, EQIBank is the only licenced bank in the world to offer insured crypto custody accounts, and it will be interesting to see what they do in this space over the coming months and years.