If you hold your crypto currencies on an exchange (say, Coinbase or Bittrex) you are putting them in a very insecure place. The exchanges are not insured and have no backup system.
It is very easy for hackers to break into the exchange and steal all your coins. There have been many instances where the exchange has gone out of business ( Mt Gox), where they were hacked and some of their coins stolen. Some hackers have even managed to steal coins directly from individuals.(Coinbase) So what can you do?
Almost anyone can store your coins safely in a safer way but it requires a bit of effort on your part.
A very nice blog by Antoni Trenchev which explains how to store your virtual currencies safely: https://www.antoni-trenchev.com/blog/storing-your-cryptocurrency-safely/
The purpose of this blog is to teach you how to store your virtual currencies safely. Cryptocurrencies and the blockchain technology they utilize are the future of money, and are designed to be secure and anonymous.
I will introduce you to the security, anonymity and transparency associated with cryptocurrencies, as well as their advantages over traditional methods of payment. I will also explain how you can use different types of wallets, including paper wallets.
There are many ways to store virtual currencies. Some use hardware wallets, others keep the private keys in an encrypted file on a computer. But the best way is to have a “cold” wallet (a paper wallet) and a “hot” wallet (a software wallet).
Here’s how to do it. First, get yourself a printer and print out a paper wallet that looks like this:
One of the most important things to do is to keep your crypto currency safe. The nature of bitcoin and other cryptocurrencies like litecoin is that they are very volatile and can be very hard to track down in a bank account. There are many exchanges out there that charge exorbitant fees and require users to store their coins on their own online wallet so the exchange can guarantee their safety, which can be a problem.
The safest way to protect your coins is through cold storage, which means that you don’t trust your coins to an online wallet or exchange. This can be done in many ways but the most popular way is through a paper wallet.
Paper wallets let you create a unique address for each different cryptocoin you have, which could be as simple as printing out a sheet of paper with a QR code on it (which we will explain below). You then transfer some amount of bitcoins from one address to another address on the sheet.
The process of creating a paper wallet is straightforward and easy, but if you do not know how to do it correctly, then you may accidentally lose all your money because all the coins will be in that one single paper wallet, and not split between multiple paper wallets.
Some things to remember:
1. Don’t store your cryptocurrencies on exchanges. The reason for this is simple. If you stored them on an exchange, a hacker could steal your coins at any time. The only security you have is the exchange’s security. If they are hacked and lose all your coins, you’re out of luck.
2. Always encrypt your wallet with a strong password (that you wrote down somewhere, or typed in) and keep it offline or in another secure location. Store the encrypted wallet file on another device (like a flash drive) that you keep offline as well. I prefer cold storage, which means storing the key to your wallet on a piece of paper or something that is never in range of the internet. You can also use a hardware wallet (like Trezor or Ledger) but these are more expensive and may not be as secure as software wallets like Electrum or Armory.
3. While there are many ways to safely store your cryptocurrency, here are few ways:
a. Hardware wallets (Trezor and Ledger)
b. Paper wallets (electrum)
c. Software wallets (Armory or Electrum)
d. Cold storage (writing down the private key in pen on paper)
Do you already have a digital wallet? Great!
This is the first step to start saving cryptocurrency.
If you don’t have a digital wallet yet, you should probably consider getting one as soon as possible.
A digital wallet is a place to manage your cryptocurrencies’ private keys. These are long strings of letters and numbers that represent your cryptos. The private key lets you access your cryptocurrencies on the blockchain. So if you lose or break your smartphone or tablet, your cryptocurrencies will still be safely stored – at least until they’re spent.
The first step towards establishing a new digital wallet is to download a software program called “Bitcoin Core.” You can find it at https://www.bitcoin.org/en/download
The most popular digital currency is Bitcoin. It’s not the first digital currency, but it’s the biggest. I like it because it doesn’t require a bank or government, and it is fast. Transactions take minutes if there are no network problems, rather than days or weeks or months. You can move your money anywhere in the world in a matter of seconds. The price of Bitcoin fluctuates as you would expect from an unregulated currency subject to wild expectations and mass fraud.
If you want to get rich with Bitcoins, you should hold onto them rather than spending them.”