Interested in cryptocurrency but not sure how storing Bitcoin, Ethereum, Litecoin, and other currencies works? Cryptocurrencies are typically stored in a type of wallet. Some are digital, others are physical, some are kept online at all times and others are offline. From mobile apps to physical coins engraved with your security key (SK), there are a number of options for storing cryptocurrencies.
This is a brief guide to 5 of the most common types of cryptocurrency wallets. Familiarize yourself with your options before you start buying and selling cryptocurrency to make sure your funds are secure and protected.
#1 Online Wallets: Online wallets run on the cloud and can be accessed from anywhere. Depending on the service, you can get online wallets that connect to desktop or mobile wallets. You can access your cryptocurrency funds from any device with an internet connection. If you’re using cryptocurrency to make online purchases or regular money transfers, an online wallet is convenient and easy to use.
#2 Mobile Wallets: Apps downloaded to your mobile give you access to Bitcoin and other cryptocurrencies from that device. A mobile wallet is another good tool if you use cryptocurrency to make regular online purchases, and it’s essential if you want to make in-person transactions.
#3 Desktop Wallets: Similar to mobile wallets, these are downloaded directly to your desktop, but they are considerably more secure than mobile wallets since you don’t rely on a third party for data. It’s also physically harder to steal a desktop than a mobile.
#4 Paper Wallets: You can store digital assets on paper with a physical copy of your security key. You can scan the QR code or simply write down the SK. There are a number of risks that come with paper wallets, mainly how easily paper can be damaged, stolen, or simply degraded over time. Paper is susceptible to fire damage and it can be seen by anyone with access to it. A home safe or safety deposit box are necessary to maintain the security of your paper wallet. However, a paper wallet removes any digital security risks.
#5 Hardware Wallets: A hardware wallet is another way to keep your cryptocurrency offline, but without having to resort to paper. Hardware wallets store your security keys on a device like a USB drive. They can be taken on and offline, making them flexible and secure. Hardware wallets are more expensive but combine security and convenience.
Many cryptocurrency users have both online and offline (or hot and cold) wallets. Wallets connected to the internet have more security risks but are easier to use. Long-term funds are safest offline.
Cryptocurrency exchanges offer an alternative to the Bitcoin wallet. Canadian cryptocurrency exchange Bitbuy.ca is one of the platforms that makes it secure and convenient to keep Bitcoin, Ethereum, Litecoin, or Bitcoin Cash on your favorite exchange. If you regularly buy and sell cryptocurrency, transfer money with Bitcoin, or make everyday purchases with cryptocurrency, an offline wallet quickly becomes cumbersome. It’s easier and faster to keep your currency on the exchange. To keep your crypto safe, Bitbuy.ca uses a 95% cold storage reserve and SSL encryption with two-factor authentication. Cold storage means keeping cryptocurrency reserves offline on a USB drive or another type of data storage. Bitcoin exchanges use cold storage to protect themselves from becoming targets of cybercrime. Before you finally decide where to buy cryptocurrency, do your research into cryptocurrency wallets and decide how to store your currencies.