To keep your digital coins safe, it’s good for potential cryptocurrency investors to understand how to buy cryptocurrency from the crypto exchanges, and learn how to secure and store those cryptocurrencies in offline cold wallets.
For all those new traders and investors who have started in the cryptocurrency world, it is vital to learn how to buy a cryptocurrency and preserve our cryptocurrency for a long time. This article seeks to explain the benefits of holding your cryptocurrency coins in offline wallets, also known as cold wallets.
You see, in real life, we keep things in cold storage because we wish to preserve them for long periods. Similarly, we buy cryptocurrency from crypto exchanges and want to hold that for long periods. Thereby we should store our coins in secured wallets, acting as cold storage for your cryptocurrency.
Now you might be wondering, to keep our coin secured, why do we need to keep coins in cold wallets?! Isn’t that the job of a cryptocurrency exchange? Isn’t our role limited to learning how to buy and sell cryptocurrency? The answer to this question is that even the best cryptocurrency exchanges, who possess the finest of security, have the possibility of losing data from their servers in case of external data theft, or what if they decide to shut down?! In that case, your investment is gone forever.
You see, cryptocurrency exchanges and third-party wallets hold private keys to your coin, which is essential for you to recover your coins in case of redeeming them. Therefore, we can keep our private key in an offline environment, away from the internet using cold wallets. Hence, we need to learn about cryptocurrency and how to secure them. In today’s world, there are several options for cold wallets.
Top 3 Ways of Storing Cryptocurrencies?
- Cryptocurrency Hardware Wallets: These are the most efficient and secure ways of storing your coins. Under hardware wallets, all your private keys are stored offline. All you have to do is sign some transactions through the private keys of your coin. If the device gets lost or damaged, hardware wallets allow you to recover your funds using a backup seed key. The following hardware wallets are present in Ledger Nano X, Ledger Nano S, Trezor, and Cobovault. However, with that said, such a type of storage method is expensive and needs to be evaluated before buying.
- USB Drive: The good old USB drive that keeps our photos, videos, and other documents can also save our private keys to the coin. It is one of the easiest and cost-effective ways of securing your coin. However, such a choice comes with its set of drawbacks, such as in case of a hardware failure, the USB drive can lose all its data. Therefore, even though this method is cost-effective and easy to use as an investor, one needs to evaluate all the points.
- Paper Wallets: As the name suggests, such wallets are given to you like paper, where your pair of private keys are printed on the piece of paper. This form of storage is the cheapest form that is present in the market. All you have to do is transfer the coins to the paper wallet’s public address, and then you are secured. However, the drawback to such a wallet is that you have to trust the printer; whosoever is printing it can steal the information. The wallet can be torn or stolen. Therefore, before storing your coin in your paper wallet, you need to evaluate all the points.
This list is non-exhaustive. There are several ways of securing your coins in cold wallets, but these are considered the safest and most popular ways of securing them. In addition, the best cryptocurrency exchanges such as Zebpay have ways of helping investors get secured wallets.
How To Redeem Cryptocurrency Coins From Your Wallet?
When you are ready to redeem your coin, all you need to do is import the wallet’s private key to a Bitcoin wallet. With that said, any wallet will work till the time it is connected to the internet. Then, you simply need to press on import/add on the Bitcoin.com wallet and follow the given instructions. Also, it is not advisable to reuse the same wallet once redeemed. Instead, one should always create a new one when required.
After reading this article, I am confident that you have learned to invest in cryptocurrency and not let it sit in the exchanges but rather transfer those coins to a safe and secured offline cold wallet.
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