Common Methods for Storing Crypto

Cryptocurrencies have revolutionized how we think about money and assets. Bitcoin is on its way to eclipsing gold as the world's primary store of value. As a result, securing these digital holdings has never been more important and requires careful planning. We've set out the common methods individuals use to store their crypto assets below.

1. Hot Wallets

Hot wallets are digital wallets which are 'online'. These include mobile apps, desktop applications, and web wallets. Popular examples include MetaMask, Trust Wallet, and Coinbase Wallet. Whilst these are convenient for frequent transactions and easy to set up and use, they are vulnerable to hacking, phishing, and malware due to constant internet exposure.

2. Cold Wallets

Cold wallets store cryptocurrencies offline, significantly reducing hacking risks. Types include hardware wallets (e.g., Ledger, Trezor) and paper wallets (physically printed keys). These are highly secure as they are disconnected from the internet. However, cold wallets are less convenient for regular transactions; hardware wallets can be lost or damaged, and paper wallets are prone to physical destruction. This is where products like Coin Legacy (www.getcoinlegacy.com) can help.

3. Exchange Wallets

Many users store their cryptocurrencies directly on exchanges like Binance, Kraken, or Coinbase. Whilst there is no need to manage private keys, exchanges often provide insurance for funds. However, exchanges are central points of attack and have been targets for major hacks. Exchanges are also subject to solvency risks (like what happened with FTX).

4. Multi-Signature Wallets

Multi-signature wallets require multiple keys to authorize a transaction, adding an extra layer of security. Services like BitGo or Casa support this method. While these prevent a single point of failure and are ideal for shared accounts, they are much more complex to set up and manage, requiring significant technical skills.

Choosing the right storage method depends on your use case, technical knowledge, and need for security. While hot wallets are ideal for frequent use, at Coin Legacy (www.getcoinlegacy.com) we prefer cold wallets for long-term storage.