Where Should You Store Your Crypto in 2023?

Now that you’ve got your coins, where should you keep them? That’s a common question potential investors ask, and it’s only normal to be so. With so many storage options available, making the right choice is nothing but daunting.

Purchasing digital currency is just part of the job, as this has to be held in a safe and sound place. With crypto scams on the rise, the need for protecting virtual coins from the curious eyes of hackers has never been greater. But if it only was that easy! Recovery phrases, public and private keys, hot and cold wallets - such concepts only make things more confusing. It’s understandable to be discouraged, but trust us - you shouldn’t. There are many ways to keep your funds safe, from exchange platforms to electronic wallets. However, you need to choose your option carefully, based on your specific needs, preferences, and after all, expectations. Even if these methods come in various forms, at their core, they all are designed to protect secret information, i.e. the private crypto key.

That being said, when looking to buy crypto from the Binance exchange platform, apart from the Bitcoin or Ethereum price, also consider these storage options:

Exchanges

An exchange is one of the most convenient crypto storage options that many investors and traders rely on. And although it’s often perceived as the least secure, an exchange has some advantages that shouldn’t go unnoticed. Exchanges are a reliable storage option for people who trade relatively small amounts of crypto - day traders are excellent examples in this sense. Since exchanges run on the Internet, it’s much easier for these individuals to manage their coins at a fast pace rather than continuously being required to access their wallet accounts. However, if you plan to invest more considerable amounts, our advice would be to store your coins in a software or hardware wallet.

Some even consider storing your virtual coins on exchange platforms a necessary evil, even for active traders. That’s because such storage options hold onto the digital currency for all their users, which makes them a more prominent target for scammers or hackers. The multiple times reputable exchanges got hacked in the last couple of years strengthen this opinion even more, making many newbies wonder whether it’s worth relying on exchange services. Well, there’s no clear answer to this, as it all depends on the chosen exchange and its security level. Decentralized exchanges (DEXes), for instance, are slowly but surely making their way into the industry, as they don’t require users to give up control of their private keys and hence are perceived as being more trustworthy than centralized exchanges (CEXes). These also allow users to trade their crypto from one wallet to another directly and with peace of mind that trades are performed and tracked appropriately. However, these exchanges must improve liquidity and speed to match CEXes.

Software wallets

Software wallets are not actual ‘wallets’ - they’re applications for mobile and desktop devices whose programs are designed to secure data. Software wallets are often referred to as hot wallets, as they’re connected to the Internet. This is also a convenient storage option, allowing you to install it on any device, be it a computer/laptop or mobile. However, it’s believed to be just as safe as the device, regardless of the many features it provides. A software wallet allows you, among others, to display your balance, make transactions, and access your crypto anytime and anywhere. If you’re going for a mobile version, you can benefit from even quicker payments in physical stores by QR code scanning or NFC (near-field communication). And you shouldn’t worry about the type of device you possess, as software wallets are compatible with both Android and iOS.

Although for many individuals, exchanges are more secure than software wallets, we don’t recommend giving up the idea of a software wallet completely, especially if you plan to invest in - not trade - crypto. In fact, software wallets could dramatically surpass exchanges if holders maintain advanced security practices and store any recovery phrases and private keys offline.

Hardware wallets

Hardware wallets are a special kind of storage, as it doesn’t involve an Internet connection. Digital treasures are thus held offline, in USB-like devices, and can’t leave the hardware wallet device due to the advanced technology this is based on. Modern hardware wallets have various features, including allowing users to make crypto transactions on their devices by simply plugging in the USB device and signing transactions automatically. In most cases, you must confirm transactions on that particular device, providing a second layer of protection. The disadvantage of hardware wallets is that they’re only reliable for long-term investments. Simply put, if you’re handling small amounts of crypto and transacting them on a daily basis, a hardware wallet would be nothing but a burden. Nonetheless, this wallet type remains the most popular, with thousands of users putting their faith in this storage innovation.

Bonus tips: multi-signature wallets and paper wallets

Multi-signature wallets are a recent innovation in terms of crypto storage, being based on the same principles as hardware wallets. However, this is not the happiest solution unless you’re not a company sharing your funds with a business partner. The most common - and recommended - use case for multi-signature wallets is a treasury fund that demands several stakeholders to confirm transactions.

Paper wallets are documents containing users’ private keys. This has emerged as an extra layer of protection since it allows crypto owners to store their keys in a physical, tangible place unknown to others. However, if you opt for this kind of storage, don’t forget to store it adequately, preferably in a safe or deposit box or even in a bank’s safe so malicious actors couldn’t find it. Some investors resort to extreme protection measures and thus opt to bury this piece of paper.

Conclusion

Now, with so many options available, it’s only up to you what you choose. There’s only one more thing you need to know: there is no ‘good’ or ‘bad’ when it comes to storage options. You should base your decision, thus, exclusively on your needs and expectations.