Digital currencies are not a new thing anymore. As a matter of fact, they have become something that is so popular that we hear about them on a daily basis, whether it’s social media, traditional news or any other part of our everyday life. What’s the reason for this? The answer is simple. Modern technologies are slowly taking over everything that was known to us so far, because they are more convenient and offer better solutions to our everyday problems. Not only that, the crypto market has become a powerful marketplace that has changed the global economy for the better. Cryptocurrencies also changed the mindset of investors, presenting them with innovative options they can rely on.
The first goal Bitcoin inventors had, was to create decentralized money that will be independent from any third parties and governmental institutions. At the same time, owners of this type of money would be fully responsible for it, without having to rely on anyone else, whether it’s a bank or any other organization. This has brought numerous benefits for the majority of people. Especially in countries where bank services are not available to certain categories of people, or if certain categories of people can’t create a bank account nor have access to any banking systems (due to some personal reasons). To them, cryptocurrencies are a lifesaver.
With as little as internet access, a smartphone and a bit of knowledge, anyone can create their digital wallet which works almost the same as a bank account only with less interventions (some would even say less intrusion).
However, with more freedom, usually comes more responsibility. What does that mean in this case? Unlike the traditional systems, where you don’t have to worry about storing your money, since there is always someone to do it for you, when it comes to cryptocurrencies, you have to do everything by yourself. Throughout the whole process, from the start till finish, you rely on yourself, and solely on yourself.
That being said, we have to mention digital wallets. What is a digital wallet, are there different types of wallets, how can you store your crypto in a secure way and can you make any mistakes along the way? We will try to answer all these questions in this article. Let’s dive into it:
What are they? What should you opt for?
Digital wallets are wallets in which your cryptocurrencies are stored. When you’re first getting started, you have several options to choose from. For the majority of people, especially newbies, the most convenient option is an online digital wallet. Simply put, it is a wallet that you get when you open an account on one of the trading platforms. Here, you will get your crypto stored, when you purchase cryptocurrencies (or coins) of your choice. The best thing about this type of wallet (which is also often called a hot wallet) is the fact that someone else is keeping it safe for you. However, this also goes with some downsides. Since your private keys are live and online, your account (therefore your wallet) could potentially be at risk to get hacked. Hackers would have to hack your password and access your account, and your crypto might be stolen.
This takes us to the second type of wallet. You can store your private keys to your coins offline as well, on your computer or any other hardware. They can be stored on a USB device, which seems to be one of the best options when it comes to safety. Once again, internet access to your funds is dangerous, since hackers can access your computer as soon as it gets online. Also, you could get viruses that could destroy files on your computer. That’s something you wanna avoid as well. Finally, you could simply print your keys and keep them safe on a piece of paper. This is, logically, called — a paper wallet. It’s great since no one can hack you but it’s not very convenient since losing a piece of paper is very common, and very likely to happen.
Mistakes and precautions
According to Casa, it’s not uncommon for people to lose access to their digital money. As a matter of fact, millions of people have either forgotten their private keys or they’ve lost their physical wallets (devices or keys on paper). This is one of the biggest mistakes you could make. That’s why it is advised to write your keys down, and put these info somewhere safe, in case you forget your keys, if they are located in a cold wallet (offline wallet). If you have an account on a crypto platform, you won’t have to worry about this, but you need to make sure that your password is strong enough, so that hackers can’t get to your coins.
Apart from making a strong password, make sure to split your crypto into several accounts (even different trading platforms), and turn on all the additional privacy options that are available, such as two party authentication, for example. This way you’ll make it more complicated for hackers to access your account.
Another tip is simple: don’t log in to your crypto account without using a VPN app or via public Wifi networks. Always make sure to use trusted internet providers, since using the risky ones could cost you a lot. If you’re using your phone for trading cryptocurrencies, you can download one of the VPN apps, and you can use mobile data instead of other public networks. If you’re using your desktop, you can opt for any of the VPN websites that are available.
Skipping any of these steps may expose you to hackers and make you lose your digital money. If you have BTC or any other cryptocurrency on your USB drive, make sure to keep it somewhere safe, and don’t tell anyone about your private keys, even if you trust them. You are the only person responsible for your coins, and if you make a mistake, there’s no going back. The same goes for making transactions. Double-check, or even triple-check everything, since you can’t redo a transaction, nor erase it. Once it’s done, you can’t do anything about it, so be extra careful. After all, you are your own boss and your own financial expert, so make sure to act like one!