How to store your Bitcoin and crypto

Where should you store your crypto?

Before launching into this topic we need to clear up a common misunderstanding. Technically you are not storing your assets anywhere. In reality, your Bitcoin and crypto always remains on their respective blockchains. What you are storing is your private key which allows you to control your assets. It is just easier to think of wallets as storing your crypto even though it is not technically correct.

Your storage options depend on how much responsibility you are prepared to take for your own security and the degree of risk you are prepared to be exposed to. There are several options for storage, all with their own pros and cons.

Exchange wallets

If you purchased your crypto on an exchange, the exchange will automatically create a wallet for you for that particular coin. Each type of coin needs its own wallet. Your first and easiest option is to leave it on the exchange. This is similar to holding money in a bank. Someone else takes responsibility for custody of your assets and you rely on them to let you access your assets when you need them.

The upside to storing your coins on an exchange is that it is quick to sell if the price goes up and you want to jump on a good price. All you have to do is set the sale price and quantity or simply sell for the going market rate. The downside to having your coins on an exchange is that you are leaving the issues of security entirely to the exchange. If the exchange gets hacked or goes bankrupt, you may not see your coins again. There have been plenty of unfortunate examples of this in crypto history. for some specific examples, read our “what can go wrong” page.

There is a saying amongst crypto investors which is;

“not your keys, not your crypto”.

This means that if you don’t personally hold your private key in an offline setting such as a hardware wallet, your crypto doesn’t actually belong to you.

Online wallets

The third option is to move your coins from an exchange to a software wallet on your computer or phone. This is a mix between exchange storage and cold wallet storage. These wallets are still online but you control the private keys so you have greater control and security than exchange wallets. There are numerous online wallets available depending on the type of crypto you hold.

Cold wallets

For security reasons, many crypto investors feel safer moving their crypto to an offline or “cold storage” wallet. This is a device which you can physically hold and control and can remove it from being online. The downside to this is that you are assuming full responsibility for custody of your own assets. If the device is lost or destroyed or you are unable to access it due to a forgotten password, no one will bail you out. If you choose to “self custody” you are entirely responsible for your own storage and security. If something goes wrong, you are on your own.

Most hardware wallets have a passphrase back up which is usually a particular series of 12 or 24 words which can be used to regain access to your coins if the device is lost or destroyed. If that is lost, you have lost your assets.

There are several options for hardware wallets. You should always buy a hardware wallet directly from the manufacturer and ensure that the packaging is sealed when you receive it. NEVER buy a secondhand hardware wallet. You may be buying something that contains malicious software designed to steal your coins.

We have links to the manufacturer websites. They may even offer a deal which will give you some free Bitcoin or other benefits. Check out our links.