The evolution of money has been a significant event in the past and present life of man as a social being. Money serves as a means of exchange as it’s generally accepted by the parties involved in the exchange of goods and services.
Basically, Money serves as a means of facilitating transactions between parties involved and it has proven to be acceptable right from the stone age, there has been some evolution in Money which started with barter trade to precious stones and cowrie, to the use of fiat(paper Money issued by the government) to the current smart and digital economy which has cryptocurrency as a
means of exchange.
With this brief explanation, you may want to ask what is CRYPTOCURRENCY.
It is a digital currency in which the transaction is stored in a digital ledger that can not be changed and is protected by Cryptography.
Cryptocurrency also known as crypto runs on a decentralized system that transfers the whole power and control of assets to the owner. Crypto runs on a decentralized digital ledger known as blockchain to facilitate and store and secure data.
Crypto serves as a legal tender in some countries that accepts it, but the system is designed in such a way that it kicks the middlemen out and brings about peer-to-peer transaction thereby reducing unnecessary charges and censorship by the government.
Now having the knowledge of what CRYPTO is, how can you purchase crypto?
Since crypto is designed to run as a peer-to-peer transaction system, there is a need to have both the buyer and seller for a transaction to be completed, crypto can be purchased through a decentralized platform known as swap which offers those with the technical knowledge to buy /swap using some decentralized apps like pancakeswap, uniswap and other, then sell to others that doesn’t want to go through the whole process of swapping. Since the advent of crypto, there has been much work put in place to make crypto more accessible to both technically and non-technically inclined individuals, this lead to the creation of exchanges that helps people to purchase and trade crypto with much ease. Since the first existence of centralized exchanges, accessing crypto (buying and selling ) has greatly improved and that leads to more adoption.
The knowledge of crypto can never be complete without you knowing how to store your crypto assets safely.
The joy of knowing and purchasing crypto can be taken away from you in a twinkle of an eye if not properly stored. With this statement, I know you are now wondering how can I store my crypto.
Like fiat money is stored and saved in banks controlled by the government, cryptocurrencies have their own way of storing and safeguarding too.
In storing crypto we make use of wallets that are of two types or categories, hot wallets which are also known as online wallets, and cold wallets also known as offline wallets.
As the name implies, hot or online wallets are wallets that need an Internet connection to access them while cold wallet has their own physical device and architecture which can be accessed easily when with the device. With the knowledge of wallets, you now know that any way you choose to store your crypto falls within the two categories either hot or cold storage.
Below are various ways to store crypto
The use of Exchange Wallets:
An exchange is a centralized platform that offers trading of crypto assets as their services, they also have wallets that are associated with individual accounts. To use exchange wallets, you must have to register an account with the exchange and do the necessary verifications. Exchange wallets are good but the owner doesn’t have full authority over the wallet. The custodian key of the wallets created on centralized exchanges is not available to the various account owner but to the exchange itself. Funds stored in exchange wallets may be lost if there’s an attack targeted at the exchange.
This type of wallet offers the owner full control over the assets stored in them. They can run on any operating system (Windows, Ubuntu, and Linux) the owner can store, manage, and determines the security of the assets because the owner has the private key to the wallet which is also the general access key. The wallet can only be tampered with if the owner reveals the secret key to maybe hackers or third parties. The desktop wallet falls under the hot wallet category, which means it needs an Internet connection before you can assess it.
The use of Mobile Wallets.
A mobile wallet is also an online wallet that needs Internet access to make use of the wallet. Mobile wallets are also a safe way of storing crypto assets and they offer a great sense of ownership and control to the owner. The owners of any mobile wallet manage and own the private key which serves as a security key to the wallet. Mobile wallets have a public key that is used for sending funds or crypto into the wallets. There are many mobile wallets in existence today but the security structure remains the feature to check when trying to choose a wallet. Mobile wallets are the commonest and easiest way to store crypto because they are compatible with a mobile device (both android and IOS devices).
The use of Hardware wallets.
A good example of Hardware wallets is the Ledger wallet, safe safe pal Hardware wallet, and Nano wallet. All these wallets fall under the category of cold wallets. They have their own physical device or gadget with their own operating systems which enable the users to use them to store crypto. They offer greater security than other wallets discussed so far because you don’t need to be online or use the Internet to access it. The greatest disadvantage of Hardware wallets the owner loses all crypto assets if the device gets lost, stolen, or damaged.
The use of paper wallets
A paper wallet is another way or medium for storing crypto which is also an offline type of wallet. To use a paper wallet, you have to log onto the website that supports this wallet, generate a wallet, fund it and print it out on paper with the barcode generated in the process, you can scan and use your stored assets anytime and anywhere.
The downside of a paper wallet; the wallet can be damaged if the paper comes in contact with water or in the case of theft, the owner loses access to the wallet and the funds it contained. A paper wallet is one of the best methods to store crypto if/when managed properly.
In making the choice of the method you will use to store your crypto assets, you have to put into consideration some of the things pointed out in this piece of information and know the one that suits you.
The advancement of the crypto market has brought about both good and bad actors so more thorough and careful exercise needs to be done, to ensure the safety of your assets.
Join Our Telegram Community to learn about best practices.
Written by: Daniel Chukwubuikem