How to safely store bitcoin?

Thousands of articles have been written about the peculiarities and unique features of virtual currencies. In our articles, we will discuss the nuances of crypto trading as well as ways to make a profit from it. However, before starting trading virtual assets, it is vital that we solve one of the most important issues – to find a reliable place to store coins and protect them from cyber attacks. We will talk about the safest ways to store coins using the example of the king of digital assets - bitcoin.

To begin with, BTC storage can be hot or cold. The difference between these two methods is the availability of an Internet connection. If the coins are placed on a device connected to the Internet, the storage is called hot. If access to the Internet is not required and the keys to the bitcoin vaults are available on hardware or paper, this is cold storage.

Let's discuss several options for cold and hot storage of coins.

1. BTC hot storage

• Hot wallets.

  Hot wallets are wallets that run on internet-connected devices and blockchains. A cryptocurrency wallet can be compared to a bank account that is used to manage virtual assets and does not require intermediaries.

  However, you should understand that an online wallet is not an exact digital copy of our usual wallet for storing fiat money. The e-wallet stores encrypted password keys that open access to the owner's assets. Such keys identify an account on the network. They can be safely shared with other users in order to receive virtual assets to your account.

  For an instant transaction, the user should just log in to the Personal Account and perform the operation. That is why many people use these wallets to quickly pay bills and buy goods in stores.

  However, there is a downside to this accessibility. These wallets are extremely vulnerable to cyber attacks. Therefore, it is recommended to store only a small amount of digital assets necessary for everyday needs.

• Crypto exchanges

  This is one of the easiest ways to store bitcoins. When registering on the digital platform, each user automatically receives a wallet that supports all coins available on the exchange and opens instant access to them.

  The main advantage of crypto exchanges for users around the world is the opportunity to quickly and easily restore access to their accounts and coins.

  However, digital platforms also have significant drawbacks. The most important one is poor security. No existing trading platform is 100% protected from hacker attacks.

  In addition, crypto exchanges may unexpectedly go offline due to technical issues. In this case, customers lose access to their virtual money and information about them indefinitely.

• Mobile and desktop app

  They are often called software wallets. Such apps can be installed on a computer or smartphone. They require a network connection. All information about the user and transactions is downloaded to the device of the owner of the crypto wallet.

  Such apps attract bitcoin users with their intuitive interfaces, as well as the opportunity to easily and quickly make transactions.

  The main advantage of this type of cryptocurrency storage is that users can track information about their digital coins regardless of place and time. They only need access to the Internet and the mobile app. It will enable them to monitor the BTC exchange rate on the go as well as to trade and work with their crypto portfolio online.

  The biggest drawback of such wallets is the high vulnerability to malware attacks. Apart from that, wallets installed on a PC are not very convenient when you leave home and there is a need to use them.

2. BTC cold storage

• Hardware Wallet

  This is a great option for those who need to store a large amount of bitcoins. A hardware wallet is a physical device like a USB stick that can be connected to a computer and used for crypto transactions. The main aim of such a device is to simplify the long-term storage of virtual money.

  What is more, it is quite easy to work with a hardware wallet. At the first launch, you need to come up with a PIN code that you will use to confirm your operations. Next, the owner receives a seed phrase - a code of 24 random words, which will restore access to the wallet in the event that the user has forgotten or lost the password.

  The main pro of a hardware wallet is that it does not require Internet access. Besides, users can always carry the device with them or hide it in a safe place. After connecting to a PC, you almost immediately get access to your digital money.

  Hardware wallets are more resistant to cyber attacks than hot storage devices. However, hackers often manage to gain access to their security system by reading a passphrase that attackers receive by creating a voltage drop.

• Paper Wallet

  A paper wallet has been considered one of the safest bitcoin storage options for many years. Devices break down, computers stop working, and digital platforms can be easily hacked. A paper wallet is a piece of paper. As such wallets are removed from the Internet, users can forget about such risks as network outages and lack of Wi-Fi connection.

  A paper wallet is a printed piece of paper with keys and QR codes used to facilitate your crypto trades. Oftentimes, such wallets also contain a seed phrase for restoring access. Usually, owners of paper wallets store them in safes and take them out every time they want to make a transaction. The main rule here is not to take pictures of the wallet on a smartphone so that the data does not get on the Internet.

  For better protection from any physical damage, experts recommend metal wallets. It can be a steel card with data imprinted on it and a seed phrase for gaining access.