When Bitcon started to become mainstream, owning crypto was something very similar to the Wild West, as owners faced lots of risk and instability. Truth be told, the same can be said today about people investing in Bitcoin, because risks and volatility did not disappear after all, and these threats are not theoretical, as new (and old) scams constantly resurge all the time. I am talking about fake crypto-schemes, search engine scams that drive people to malicious crypto-exchange sites, Trojans that lurk on computers and steal Bitcoin wallet addresses, phishing attempts trying to steal people’s cryptographic keys, fake wallet setups and so forth and so on. If you’re intending to invest in Bitcoin, you should be very careful and watch your back at every turn, that’s rule number one. Hence today’s article, which is aimed at giving you the basics with regard to storing Bitcoin, the king of cryptocurrencies.
Store your Bitcoin via an Exchange
Since the initial purpose of Bitcoin was to act as “surrogate money” or an alternative to fiat currencies if you like, i.e. a decentralized method of payment that does not fall under the control of governments, the simplest method to store Bitcoin is in a trade or exchange. Storing your Bitcoin in an exchange will give you the ability to sell, buy and trade Bitcoin (for goods and services) almost instantly. There’s a caveat to storing your Bitcoin using a third party (like an exchange or a broker), a method also known as a custodial wallet. Basically, if you’re not the only one to hold the private keys of your Bitcoin, you don’t actually own your Bitcoin. It’s just like when you keep your money in a bank, but without FDIC/governmental protection. If something wrong happens (and there are many examples of Bitcoin exchanges getting hacked and people losing their cryptocurrencies), you’ll probably not be able to recuperate your assets. It’s worth mentioning that no insurance company has ever paid out its customers on a Bitcoin exchange claim of hacking, so keep that in mind for future reference. The problem with Bitcoin brokers/exchanges is that they make for the perfect target for hackers, as they store thousands of Bitcoin at any given moment, that if the CEO of the company or a number of high-rank employees don’t decide one day to go rogue and simulate a hack-attack on their exchange, while making up a story about how they’ve been attacked by “Russian bots” or whatever. Bitcoin exchanges/brokers can also be shut down by governments for various reasons (that happened in China, South Korea, Japan, Venezuela and other places), and if something like that happens, you’ll probably lose all your “treasure”.
Store your Bitcoin via Online Wallet
Storing your Bitcoin by using an online wallet makes for a better approach, as you have full control over your private keys from the wallet at any given moment. There are many alternatives for storing Bitcoin via online wallets, like Coin.Space, Green Address or Coinapult, to name just a few. The caveat to that is your private keys are stored online, which means they’re vulnerable to hack attacks, zero-day vulnerabilities, i.e. they’re not 100 percent safe.
Store your Bitcoin via Desktop Wallet
This makes for a more secure method of storing Bitcoin, as opposed to exchanges and online wallets, because utilizing a desktop wallet, i.e. your own PC or laptop, means that your private keys (essentially your Bitcoin) will be stored basically offline, in relative safety. However, there’s a caveat to this method also, as your computer may get infected with malware targeting Bitcoin, which means you’re still vulnerable to hacking/stealing. However, provided you’re very tech savvy and you know a thing or two about internet security and stuff like that, storing Bitcoin via a desktop wallet is a viable choice for people looking for complete anonymity in their Bitcoin transactions, as your Bitcoin wallet won’t be connected to your Email address/IP address.
Store Your Bitcoin via Mobile Wallet
This method of storing Bitcoin uses your smartphone and an application that can be downloaded (for free) from Google Play Store or Apple Store. Mobile wallets are pretty good in terms of anonymity, especially if you’re using a burner smartphone, as they don’t require you to introduce any personal/private data, hence your exchanges are almost 100% anonymous. Be advised: your private keys will be stored inside the smartphone, and in case it gets lost/stolen or whatever, you can only restore your Bitcoin via a reinforcement seed/recovery seed, so keep that in mind if you decide to go for a mobile wallet. Mobile wallets for storing Bitcoin are excellent while traveling and for quick transactions on the go. Some of the most popular mobile wallets include Jaxx, Mycellium and Copay.
Store Your Bitcoin via Hardware Wallet
One of the most secure methods for storing Bitcoin is to use a hardware wallet. A hardware wallet stores your private keys on a specially built and secured device ( like Trezor, KeepKey or Opendime, see full review and comparison here) or on a regular USB drive/other data storage device, which means your private keys will be stored offline and they’re immune to hacking and computer viruses. Since there’s no personal information to link you to these hardware wallets, they will provide you with complete anonymity. Even if you lose the hardware wallet, you can recuperate your Bitcoin by using a seed phrase.
Store Your Bitcoin via Paper Wallet
Just go to Bitcoinpaperwallet.com and you can create your own Bitcoin paper wallet. For the highest security, you should generate your paper wallet offline, i.e. disconnect your computer from the internet while doing it. This method of storing Bitcoin is basically a hard-copy of your seed-access information, which makes it 100% secure, as your private keys never touched the internet. However, paper wallets are still vulnerable to loss and theft, and they should be kept in a safe deposit box, just like cash or jewelry.
If you choose to store your Bitcoin by using a third-party service, which is vulnerable to security breaches, attacks etc. , you’re basically trusting someone else to keep your wallet secure. If you take matters into your own hands, it’s way more secure but can also be misplaced.