With the increasing popularity of cryptocurrencies, questions like “what is the safest way to keep crypto” have become more important than ever. Whether you are a beginner looking for the safest way to hold your crypto, or an experienced user exploring alternative storage options, this guide will help you make an informed decision. Learn about cold storage wallets, paper wallets, multi-signature wallets and more.
Cold storage wallets
Cold storage wallets are the most secure way to store cryptocurrencies. Unlike a hot wallet, where private keys are stored on an online device, cold wallets store the private keys offline and in a secure, air-gapped environment. Approaches for this kind of storage include hardware wallets like Ledger or Trezor and paper wallets.
Paper wallets
Paper wallets are an offline cold storage method of saving cryptocurrency. They offer a very secure way for storing your cryptocurrency. This is because they are a physical document with both public and private keys printed onto them. Paper wallets work by generating codes based on a type of cryptography called Private-key cryptography. This means that only you can access the funds stored in them.
Multi-signature wallets
Multi-signature wallets, are wallets that require additional authentication from you or another user before transactions can be processed. This is a handy security feature for those of you who don’t want to put the responsibility of a single person (like yourself or someone else with access) into having control over all of your funds. By introducing an extra layer of authorization with multi-signature wallets, would be hackers and scammers have an even more difficult time in trying to break into your wallet.
Security precautions to take when storing crypto online or offline
Before you decide to securely store your crypto online or offline, it is important to take a few security precautions. Make sure that your wallet and the device used to access it remain secure at all times. On top of strong passwords, use two-factor authentication when possible. Additionally, ensure that anti-virus software is installed on any device being used as part of your wallet setup process. Finally, encrypting sensitive data stored in your wallet can add an extra layer of protection against potential thieves.
Regularly backup your private keys and funds recovery processes
Another important security measure is to always keep a backup of your private keys and/or seed phrases. This will help you gain control and access to your crypto funds if the device you used has been lost, stolen or destroyed. Additionally, it’s important to think about the best funds recovery processes. This may vary depending on the type of wallet you decide to use. For example, paper wallets require you to create the keys for all exchanges before creating a secure wallet. Whereas cold storage wallets confers extra safety measures such as setting up multiple authentication factors (e.g., email verification). Storing copies of your private key in various locations also serves as an extra layer of protection in case they are lost or stolen.