HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%
XM information and reviews
XM
82%

Secure your cryptocurrency: Storage options and best practices


Every cryptocurrency owner needs a place to store his assets, and the storage method of choice needs to be as secure as possible. While there are many options available when it comes to storage, sooner or later, those who want to hold cryptocurrencies for the long-term will eventually need to start thinking about who exactly is the one holding all the keys to their crypto.

In fact, while you may use an Exness Bitcoin wallet for making cryptocurrency deposits and withdrawals to and from your Exness account; these wallets should not be used for long-term accumulation of your crypto wealth. 

So, first, let’s clarify what these so-called wallets are. In short, a crypto or digital wallet can be a web or mobile/desktop application, hardware device, or even a piece of paper, which is able to store your private key or seed phrase. Private keys may come in alphanumeric format or, more commonly, in the form of a seed phrase, which is a list of common English words in sequential order. If somebody has access to your private key, it means they have access to the funds in your wallet, and this is why you should be the only one with access to your private key and why you should never share it with anyone else.

Below we will outline the different cryptocurrency storage options you have at your disposal along with their risks, pros, and cons.

Custodial wallets

In terms of access to a wallet’s private key, there are 2 ways to store cryptocurrency - custodial and non-custodial wallets. Custodial wallets are wallets provided and controlled by a third party (custodian). Typically, the third party is a cryptocurrency exchange, which controls your private key.

This is the simplest and most convenient option as a custodian will effectively be handling your wallet, and you don’t need to worry about losing your private key. As long as you can access your exchange account, you can access your crypto.

However, this convenience comes with the lowest security level:

As such, custodial wallets should not be used for the long-term storage of your crypto.

Non-custodial wallets

Non-custodial wallets are totally owned and controlled by you as you are the only one with access to the private key or seed phrase. Generally, there are two types of non-custodial wallets: hot wallets and cold wallets. Hot wallets, such as desktop and mobile wallets, generate and store your private keys on internet-connected devices. Internet access makes transactions quick and easy, however, these wallets are meant to be used for small amounts of cryptocurrency. This is because it is much easier for hackers to discover and exploit security loopholes associated with hot wallets such as malware and viruses.

Hot storage pros and cons

Mobile wallets have become increasingly popular due to the convenience of smartphones. On the other hand, it has also led to scams, such as the distribution of malicious Android and iOS apps through websites impersonating legitimate services. These malicious apps are able to steal victims’ seed phrases by mimicking a Trust Wallet, Coinbase Wallet, MetaMask and other popular mobile wallets. Such attacks have become incredibly sophisticated - attackers modify the official apps in a way that it’s hard to detect malicious activity since they are identical in every way to the originals. These trojanized apps are distributed through various channels, including fake wallet websites and Telegram groups. Two of the most recent scams are SeaFlower and CryptoRom, targeting mobile wallets users.

Other malware can hijack your device’s clipboard history and replace an address you copied with the thieves’ wallet address. Thus, when copy-pasting addresses, a user should double-check to make sure they match the address intended to be copied.

Cold wallets, such as hardware wallets or even paper wallets, store your private keys offline. Since they aren’t connected to the Internet, they offer a greater level of security than hot wallets. There is a trade-off in usability, however; in order to make transfers, these wallets need to be used in combination with an internet-connected device.

Cold storage pros

Cold storage pros cons

However, like any other wallet, cold wallets are also prone to human error. For example, scammers can send fake hardware wallets, which ​​contain hardware designed to steal crypto. To initialize the device, a user is asked for their 24-word recovery phrase, which can then be used by attackers to generate the wallet’s private keys.

Also, not all hardware wallet vendors have their source code freely accessible to the public. Thus, it may be worth doing additional research to make sure the hardware and software are safe. 

Top security measures and best practices to secure your crypto

Split a seed phrase into parts and store each part in a different location

Remember that cryptocurrencies - for better or for worse - are decentralized assets and the responsibility of keeping your crypto secure rests with you alone. Make sure you’re aware of all the basic security measures, so you can choose the security level you wish to apply based on the amount of crypto you hold and your personal risk tolerance.

#source


RELATED

HotForex Grand Seminar 2018

Our webinars are designed to improve your FX knowledge and help you hone your trading skills to give you the confidence you need to trade the markets...

Relative Strength Index

The Relative Strength Index (RSI) is an oscillator that measures a particular financial instrument's current relative strength compared to its own price history...

Is it Still Smart to Trade in Precious Metals?

Is precious metal trading still traders’ choice? People have been putting value on precious metals since the beginning of time. The price of gold was $35 per ounce in 1971...

What Is Spoofing in Crypto Trading?

Spoofing is a way to attempt to manipulate the market in your favor. If you spend any time trading, you will eventually hear the term “spoofing.” Spoofing is illegal...

Which Cryptocurrency can you realistically trade online?

The financial crisis led to the worldwide distrust in the financial system. To help solve this problem, an anonymous person...

Top Tech Trends of the Future for Trading

Tech development impacts our daily lives as well as traders’ profits. Technologies change rapidly, creating new opportunities in everyday routine and the stock market...

Designing Forex Trading Plans and Rules

Just about every consistently profitable...

Major advantages and disadvantages of mirror trading

The world of trading is often seen as a big and intimidating one. There are so many different commodities, currencies, and cryptocurrencies to trade that it can be difficult...

Small-caps and large-caps. What’s the difference for those who buy them?

Shorthand for "market capitalization", the term market cap refers to the total value of all a company’s shares of stock. One can calculate it by multiplying...

FXOpen Forex Partnership Program

We offer our Forex partnership program to traders, Forex brokers, and website owners who publish information about fiat and crypto-currency trading...

Cyber Monday and the Stock Markets: Friends or Enemies?

The first Monday coming after Thanksgiving is called Cyber Monday and it is very similar to Black Friday only that the former mainly occurs online. Cyber Monday...

Mastering Oil Trading: Comprehensive Strategies and Crucial Aspects

The world of oil trading offers a plethora of opportunities for savvy traders, but it also presents unique challenges. Understanding the nuances of trading in Brent Crude and West Texas Intermediate (WTI)...

Everything you Wanted to Know about Dogecoin

Sometimes, the best things in life start as a joke, and Dogecoin is not an exception. Initially created as a joke in December 2013, based on the popular Doge meme of a Shiba Inu dog...

Thriving in Day Trading: A Comprehensive Guide to Mastery and Risk Management

Day trading, an increasingly popular venture in the digital era, offers attractive prospects for generating substantial income online. With trading platforms amassing millions of users...

Understanding What Crypto Trading is All About

The idea of Bitcoin and other cryptocurrencies feels like it has only just been created, but the first instance we see of these digital assets came out around 11 years ago...

Exchange Traded Funds (ETF) - Meaning, Types, Benefits

ETF funds may become a good alternative to stocks for those who have just turned their attention to earning on the stock market. We have decided to find out what ETFs are worth choosing...

What is the Metaverse? The future of the internet

When Mark Zuckerberg announced that he’s turning Facebook into a metaverse company and changed the company's name to Meta, the metaverse quickly became...

Exploring The Limitations Of Fundamental Analysis: A Comprehensive Perspective

Fundamental analysis is a method used to evaluate securities by examining the underlying factors that influence their intrinsic value. It involves analyzing both qualitative...

The Intricacies of the Cryptocurrency KYC System

Cryptocurrencies, emerging as digital currencies secured with encryption, function on a decentralized peer-to-peer network and are recorded on distributed ledgers called blockchains...

Complete Guide to precious metals trading

Both Gold and Silver are considered valuable metals and have been chosen by various clients for years now. Nowadays, precious metals trading...

FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%
FXNovus information and reviews
FXNovus
75%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.