Cryptocurrency is a digital or virtual currency that is created by Mining. It was launched in 2008 after the techs realized that traditional financing systems can’t be trusted anymore. Crypto was developed as an alternative to hard money, but soon it became global dominating finance.
It is available for anyone and almost everyone to buy crypto at different exchange platforms. One can buy crypto and store them on the exchange itself. But people are often confused regarding the storage of crypto.
Buying crypto is now easy with exchanges like CoinDCX and Wazirx, but what do we do after buying the tokens? Should we hold them on the exchanges or should we move them to a safer noncustodial wallet?
We have discussed various options for you. So let’s have a brief look at where your cryptos are stored.
Store your crypto
As mentioned before cryptocurrency is a digital currency, so you can’t hold or keep it in your bank accounts. And there might be people who are skeptical about holding these currencies digitally because there are thousands of hackers and millions of issues regarding stolen funds. That leaves us with secured Digital wallets. You can store or hold your crypto in these wallets that are often provided to you by your crypto exchange.
What are digital wallets?
You’ve been using a physical wallet for years now to hold or keep your cash in it. Digital wallet is somehow similar to it. You can store your cryptocurrency on a web-based Or a hardware-based wallet. These wallets are digitally available on various exchange platforms. You can have access to them when you buy or hold crypto. Each individual user has a private key for their own wallet. These keys define and protect the security of the wallet. If you lose your key, you lose your wallet until you’ve reported to the respective exchange platform and got your wallet seized.
There are two different types of wallet where you can store your cryptocurrency after buying :
1. HOT WALLETS
Hot wallets are simple and easy. They are the most common type of wallets used by crypto holders to store their crypto. After signing up on an exchange, download a mobile wallet for everyday use. Hot wallets are web-based wallets that are easily accessible. It might be convenient to use but it is always advisable to not store a huge amount of your digital assets in this Wallet due to its security default. It is connected to the internet and is exposed to security threats.
2. COLD WALLETS
Cold wallets are always more preferable due it their high-security features. They are hardware-based wallets and will be connected to the internet only when you want to. These hardware wallets use a physical medium to store the private keys of the individual user making them inaccessible to hackers. The cold wallets are mainly used by people holding a huge amount of crypto or People who don’t trade every day. Because transferring your crypto from a hardware wallet to a web-based wallet and then making transactions is a bit time-consuming.
The type of wallet you select should be based on your needs and frequency of crypto usage. You can opt for a hardware wallet if you do not plan to use your crypto very often. The ones that you use very often can be stored on soft wallets.