What is the best place to keep my crypto safe? This article will explain in detail all options you have as a starting cryptocurrency owner or investor.
The cryptocurrency market can be considered a dangerous place. Indeed, in recent years, we have heard how exchanges got hacked, how Bitcoin was asked as ransom and how phishing scams expanded through platforms such as WhatsApp, Telegram or Discord.
Crypto Exchange Hacks
Some cryptocurrency exchanges have been attacked by hackers. Their goal is to get access to the hot wallets of the company. Due to this reason, a wide range of exchanges lost millions of dollars worth of crypto. This has affected the reputation of the virtual currency market.
Private Data and Bitcoin Asked as Ransom
Criminals have also seen a possibility in getting access to Bitcoin by hijacking personal data and requesting BTC as ransom. Attackers would have access to your private information and request you to pay for a ransom in BTC in order for you to recover your information.
This is highly related to the previous point. Phishing scams are becoming very popular in the crypto market. For instance, hackers are using Telegram, WhatsApp, and other messaging platforms such as Discord to get novice users to send money to them.
Some of these hackers impersonate customer support agents from large exchanges and request users to provide information about their crypto holdings. Many newcomers to the industry fall victim to these malicious attempts to steal users’ funds.
These and many other issues have been affecting the cryptocurrency market in a negative way. As a result of this, we have decided to clarify some notions about this industry. The main question we will try to answer is whether the cryptocurrencies you want to buy or own are safe.
Is My Crypto Safe?
First of all, your cryptos are safe. The technology using cryptography on itself is safe. You hold Bitcoin and you can be sure the virtual currency is a safe store of value. However, the platforms that are offering crypto services are part of the problem. Furthermore, the way in which you hold your funds is going to have an impact on crypto safety.
The cryptocurrency market is a dangerous place if you don’t know the answer to “How to store my crypto safe.” We have heard over the last years how exchanges, wallets, and other protocols were hacked. This resulted in the loss of millions of USD worth of crypto. Consequently, it is very important to know how to store crypto safe.
At the same time, phishing scams have affected the credibility of the entire crypto market. As I mentioned in the introduction, these are issues that have certainly damaged the reputation of the crypto market.
Thus, this brings us to the question: is my crypto safe?
Yes they are. Additionally, if you just bought cryptocurrency and having doubts then know that they are safe to use. However, there are some things you need to take into consideration to make sure your funds are protected. The first thing you need to know is that hardware wallets are the best way to store your crypto funds. Nevertheless, the hardware wallet alone is not enough.
Cryptocurrencies are changing the way in which the financial world works. You should consider yourself your own bank, and this comes with more responsibilities. You can have the best hardware wallet in the market, but if you don’t know how to properly store your private keys, then, your funds could be at risk.
Best Places to Keep Your Crypto Safe
In short, below a consolidated list of best options you have on places to keep your crypto safe. Also, in this article will be explained in detail why these are the best options to keep your crypto safe.
- Ledger Nano – The most secure cryptocurrency hardware wallet to store your crypto offline.
- Coinbase – US-based cryptocurrency trading platform with the most secure custodian wallets.
- Exodus Wallet – Software wallet that stores 30 coins and holds your private key on the device.
- Atomic Wallet – Software wallet that also stores the private key on your device and stores 300 coins and tokens.
Another thing you should take into consideration is that cryptocurrencies are based on blockchain technology. Bitcoin (BTC), Ethereum (ETH) and Liteocin (LTC), among other digital assets run using encryption methods.
This encryption is almost impossible to hack. For example, the Bitcoin network is so secure that billions of dollars have been transferred through it. Millions of dollars are transferred using BTC on a daily basis.
Cryptography allows for Bitcoin and other cryptocurrencies to avoid the “double-spending” issue. When you use digital payments, there might be some ways to recover the funds you spent once you have sent them.
To avoid this issue, Bitcoin and cryptocurrencies broadcast all the transactions on a distributed ledger. Miners then control and approve the transactions that are not considered to be illegal (double spent). This can be achieved by using the Proof-of-Work (PoW) consensus algorithm.
Most of the largest cryptocurrencies, including Bitcoin, Ethereum and Litecoin have already solved this issue. They work in an efficient way and became secure networks. However, some smaller coins might be subject to attacks and other double-spending issues.
In order for a hacker to control the Bitcoin network, it would be necessary for it to control 51% of the BTC mining power. This is a very difficult thing to do, even for a government. Thus, “Is my crypto safe?” this is the question we will be answering in the coming sections.
What is the best place to store my crypto safe?
Cryptocurrency exchanges are great platforms to buy and handle virtual currencies. Indeed, we can buy, trade and even stake cryptocurrencies here. But they might not be the safest way to store crypto. Although modern exchanges like Binance or Bitfinex are considered a safe option, you should know that exchanges are not the best option.
Why? Because they can be hacked or affected by attacks. This could make it certainly harmful for you if you have large amounts of crypto deposited. Exchanges should only be used to trade. Large amounts of funds should be kept in hardware wallets or in wallets that you are able to control.
Hot and cold wallets are the two main kinds of wallets available in the market. They allow you to keep control of your coins (you have your private keys). However, the safest way to store your crypto safe is a hardware wallet.
Best places to store my crypto safe: Comparison
This comparison guide provides an overview of where to keep your crypto safe without the risk of being compromised or hacked in any matter. The research is based upon user experience, which takes safety as the most important factor.
|Ledger Nano||$75 – $150||5 / 5|
|Coinbase||Free||3 / 5|
|Exodus Wallet||Free||4 / 5|
|Atomic Wallet||Free||4.5 / 5|
Hardware wallets vs Hot wallets
Hardware wallets are considered cold wallets that are not connected to the internet. They will allow you to hold your funds without being worried about being hacked. Hardware wallets tend to look like pen drives that connect to your smartphone or computer and help you handle your digital assets.
You will have a seed phrase (24 words) that will help you recover your funds in case you lose the device. This seed phrase should be kept in a safe place and should never be revealed to anybody else.
Hot wallets, instead, do not offer you the possibility to be disconnected from your computer or smartphone. Hot wallets include smartphone wallets and desktop solutions. Both of these hot wallets will allow you to keep your funds safe. Indeed, you will be the owner of your private keys. These hot wallets are also known as software wallets.
Nevertheless, you should always pay close attention to phishing scams, viruses that could affect your devices, and malicious files. A good example is to buy the Ledger Nano only at the official website(store). In fact, third-party sellers have been known to tamper these devices with malicious software.
Which one is more secure: Hardware Wallets or Software Wallets?
Hardware wallets are definitely the most secure. If you want to be sure your funds are safe, hardware wallets will help you to do so in the most efficient way. Instead, software wallets can be compromised and eventually hacked.
This is why, if you want to know whether your funds are safe, you should have them in hardware wallets. These wallets are almost impossible to break if the attacker does not have your seed phrase or private keys. Thus, you should keep this information in a safe place.
Moreover, if a stealer is able to get your physical device, they would not be able to do anything with it unless they know the pin code you created. Furthermore, you can also recover the funds if you know you lost your hardware wallet.
Software wallets are very easy to use. That’s definitely the best thing they offer. However, they do not have the security features of hardware wallets. You could be affected by a computer virus or targetted by a phishing scam. If the hacker has access to your computer, they could eventually control your software wallet.
Investing in a hardware wallet could be the best thing to do if you are a long-term investor.
If instead, you are a cryptocurrency user that prefers to spend digital assets, a software wallet could work better. Software wallets can be relatively secure and they are also very easy to use. Furthermore, they can be used to make daily payments in virtual currencies and to send and receive transfers.
Can Cryptocurrencies be Stored Offline?
Hardware wallets allow users to store their private keys offline. That means that nobody more than you can have access to them. This is one of the basic things of hardware wallets. However, your cryptocurrency funds will be always online. They will always be on the blockchain.
If you have BTC, you can search the wallet address on a Bitcoin explorer and see the information of your BTC there. You can find information about your past transfers and the BTC you are holding.
Private keys are one of the main components of the cryptographic security that is protecting your digital assets. With a private key, you are able to prove ownership of your digital assets. Private keys are connected (linked) to a public address.
The public address is available for everyone that wants to send you funds. Instead, private keys protect your funds and confirm you can have access to them at all times. If you have a hardware wallet, you will have to store the private keys to your cryptocurrency in a secure place.
Thus, your funds will be securely stored on the blockchain. The private keys that give you access to these funds will be stored offline. You can store the private keys in a security box at a bank or underground. This will depend on you. If instead, you take your private keys in your smartphone or computer, you could be affected by an attack. It’s true that if you store your private keys online, then a hardware wallet would be as secure as a hot wallet. Therefore, private keys should always be stored offline.
How Secure is a Hardware Wallet vs Coinbase?
As already mentioned, a hardware wallet is the most secure way for you to store cryptocurrencies. You can be sure your funds will be protected at all times as long as you keep your private keys / recovery phrase in a safe place.
Coinbase, instead, is a cryptocurrency exchange that keeps custody of your coins. This is why you should take into consideration that you will not hold your private keys. Nevertheless, Coinbase is a very secure cryptocurrency platform. They are offering services not only to retail traders but also to institutions.
This shows that the company takes very seriously the security of their customer’s funds. In addition to it, Coinbase has never been hacked (according to what the company claims). Although there is a possibility of losing your funds, it is very low. Some exchanges have even created additional funds that would be used in case of hacks. Coinbase is a regulated entity that keeps small amounts of their funds in hot wallets.
Despite that, we consider that the best way to hold our cryptocurrencies is by using a hardware wallet. This would give us control of our private keys. Thus, I store my crypto safe using a wallet for which I can control the funds I have deposited in it. With Coinbase, this possibility does not exist because they keep custody of your private keys.
What is the Safest Cryptocurrency?
In terms of cryptocurrency safety, we could confirm Bitcoin (BTC) is the safest. It is almost impossible for a single party or even a group of malicious entities to attack the network. They would need so much energy that it would have to surpass the energy consumed by several countries in the world.
In order to attack Bitcoin, an entity would have to perform a 51% attack. This is a very common attack for Proof-of-Work (PoW) networks. If they are able to get more than 50% of the hashing power of this PoW network, they would be able to re-organize blocks. This could end up creating losses for crypto holders.
The Bitcoin network is so large that it would be almost impossible to be affected by a 51% attack. Litecoin (LTC), for example, is also a secure virtual currency. However, not as secure as Bitcoin. Both Bitcoin and Litecoin are leaders on their hashing algorithms. That means that they control the hashing power for a specific mining algorithm.
If they would not control this mining algorithm (by having a larger hash rate), it might be possible for larger miners to take control of the network in an easy way. Thus, you shouldn’t be worried about a 51% attack in large cryptocurrencies.
Is my Crypto safe on the blockchain network?
If you are wondering “Is my crypto safe?” then you should take into consideration two main things: whether you are holding them in a secure hardware wallet and if the network is among the largest in the market.
Most of the top 10 cryptocurrencies are secure networks. Thus, you shouldn’t find large security issues among them. Nevertheless, anything can happen. In the future, a hacker could discover a bug and exploit it. Portfolio diversification is a good way to reduce risk.
In terms of privacy, Monero (XMR) is one of the best cryptocurrencies to use. If you don’t want to share your private information with third parties, XMR is one of the safest cryptocurrencies. This virtual currency is known to be the largest privacy-focused cryptocurrency in the world.
By using XMR, users can be sure that information such as address and funds transactions will remain private. This does not happen with Bitcoin, Litecoin or Ethereum. These last digital assets have public blockchains where the information can be publicly checked and seen.
All in all, we have to conclude that cryptocurrencies and blockchain technology are here to stay. However, as with any new technology, there are always scammers or other bad actors trying to trick ‘newbies’ who want to get involved.
With this article, I hope you have learned how to act properly in the rising crypto industry by showing you the best places to keep your crypto safe. Whatever your reasons might be or whatever cryptocurrency project you are supporting it’s very smart to do the proper research first. Always!
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