When it comes to using and securing your tokens, you have to make the best choice to be sure your crypto-funds won’t be stolen or lost. That’s why you need to decide what kind of crypto-wallet you will use to send, receive, and store your coins in the safest way.
Of course, if you trade cryptocurrencies like Bitcoin, Ethereum, or other altcoins, over the short-term with derivatives like CFDs (Contract For Difference), you won’t need to secure your tokens because you won’t own any. Why? Because CFDs are financial contracts between you and your broker to exchange the difference in the value of an underlying asset without owning it when you close your contract.
But if you want to own cryptocurrencies, you will have to buy them on a reliable and well-known broker or exchange platform and know the different kinds of wallets you can use to choose the one with the most secure features – especially if you’re planning on keeping them over time, or if you’re investing a large amount of money.
So, let’s talk about the different ways you can store your coins and why hardware crypto-wallets using USB ports are the best options.
The first thing you need to know is that there are two main kinds of wallets you can use to store your tokens, depending on how your private key comes in contact with the Internet: hot wallets and cold wallets.
Hot wallets represent wallets that are always connected to the Internet because they are like applications. Therefore, your private key is less securely stored because it is always online, which means it is more vulnerable to hacks and theft. Desktop wallets, web-based wallets, and mobile wallets are the most popular types of hot wallets.
Cold wallets, on the other hand, do not keep private keys online. They are designed for cold storage which implies that the keys to access your tokens are stored offline, which prevents hacking and theft incidents.
While they are highly recommended for HODlers and buyers with a vast amount of cryptocurrencies, cold wallets are also great options for anyone looking for the most secure type of wallet. Paper wallets and hardware wallets like USB-type crypto-wallets are two types of cold wallets.
While paper wallets, which are basically a piece of paper with your private and public keys on them, are quite simple compared to hardware wallets, they are also risky because anyone could steal them and become the owner of your cryptocurrencies. Moreover, a piece of paper can easily be damaged over time (water, fire…), which means that you could lose all your tokens if you do not keep your paper wallet in a safe and secure place.
This leaves us with the most secure option – hardware wallets. These are small devices like USB keys.
UBS-like crypto-wallets are specifically built for securely sending and receiving tokens, which means that they’ve been designed with very secure elements. Your private key is stored directly within your hardware wallet and is kept offline, which means that they do not expose these keys.
While specific types of hardware wallets have been launched over the years, some people are able to create a cold storage crypto wallet with a classic USB memory stick…