The safest way to store cryptocurrency?
With the popularization and the trendsetter that cryptocurrency has become in recent times, it has become near to impossible to stop oneself from being tempted by them. And with temptation comes great flaws, that too when you are not completely safe and sure in a digital space. It was news everywhere when a hacker in August 2021, stole approximately $600 million in cryptocurrencies from The Poly Network. Well, even though they had returned the money and no harm was done, it made everyone think of the dangers, to such an extent that The Poly Network even offered a job to the hacker for finding loopholes in their security. Then another attack hit the crypto world, when the Japanese cryptocurrency exchange, Liquid was also hacked, when about $97 million worth of digital coins were stolen and their security was compromised. Such incidents are definitely worth more than a thought. It makes users and customers ponder over the question, “How to keep the cryptocurrencies safe?”
Here are a few methods which might prove to be helpful when it comes to storing cryptocurrencies safely. Wallets are the first which pops up in one’s mind when they think of cryptocurrencies. A wallet is a name for the methods to store virtual money. Well, yes the way in the non-virtual world is also quite similar if we speak on simple terms to understand. Virtual currencies could be stored in hot and cold wallets. Empty wallets are also found and they have the same value. A hardware wallet is a place to safely store private keys. The main aim of the hardware wallet is to keep the private keys secret as they are needed to authorize transactions. Wallets often make use of a seed phrase. A seed phrase is a list of words that store all the information needed to recover cryptocurrency funds on-chain. Wallet software will typically generate a seed phrase and instruct the user to write it down on paper and keep it in a safe place. If you were to give out your seed phrase, for example as a result of a phishing attempt, the threat actor would then be able to get access to your wallet.
A cold wallet is a hardware wallet that is not connected to the internet. A cold wallet ranks very high when it comes to safely store cryptocurrency. But a cold wallet also has a few drawbacks. They cost money. Prices for common hardware wallets range from $50 to $200. Cold wallets are not available for every cryptocurrency. It could be easily found for storing well-known cryptocurrencies, such as Bitcoin and Ethereum, but lacks when one might want to invest in rare or new cryptocurrencies. If one loses or breaks their cold wallet beyond repair, then there is no way to recover it. A hot wallet can be seen as a tool that allows a cryptocurrency owner to receive and send tokens. If spoken clearly, the main purpose of the exchange is to not safely store the wallet of its customer (even though many of them do offer this particular option). Most crypto brokers that work with these exchanges try to ensure a continuous flow of supply and demand work with cold wallets and will probably advise the users and customers to do the same.
The entirety of securely storing one’s cryptocurrency might be a bit tricky as we are here talking about huge amounts that might be actually worthy of investments in security. One needs to be completely aware of the process and understand them. Hopefully, with newer technology and the huge heights which cryptocurrencies are currently aiming and staying in, many methods to secure the users’ concerns will be made, so that the storing of the digital currencies will be more safe and secure.