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VIRTUAL
REALITY
With digital currency becoming a major global in uence we ask our girl in LA Juliet Annerino, to give us the low down on the perfect way to keep your Cryptocurrency.
Today’s user and holder of cryptocurrency has a myriad of choices for how to store, receive and send funds. Let’s look at these ways of keeping one’s coins and tokens, their wide range of advantages and disadvantages, safety features and dangers, complications and limitations. We’ll touch on a few here, and some ideas for the best way to keep your digital assets safe and sound.
Generally speaking, there are a few terms to un- derstand. “Hot storage” implies keeping one’s di- gital currency online from your desktop/laptop, or through an app on your mobile device.
Let’s discuss the desktop/laptop options rst. This might mean funds kept on an exchange such as GDAX (Global Digital Asset Exchange), Bittrex or Poloniex. It might also mean keeping your funds on a service like coinbase.com that also offers buying/ selling cryptocurrency with USD as a service for a fee. Some problems with keeping investments in this way are:
Limitation of tradable coins‘ accepted in wallet. For instance, only Bitcoin, Bitcoin Cash, Ethereum and Litecoin can be stored on Coinbase and GDAX (the exchange owned by Coinbase).
Lack of customer support. Poloniex and Kraken have experienced such overwhelming volumes in trading that they have shut down for periods of time in the last 6 months. Remember that these are your coins then virtually trapped with them and not in your possession. If an exchange goes down, your digital currency is inaccessible to you for as long as they are down. Instances of exchanges freezing withdrawals have also occurred and may occur again. This brings us to...
Any online wallet or exchange that holds your private keys, such as Coinbase, has possession of your currency. Unless you hold your private keys, you do not control your currency directly. This is
a security risk that should be considered by anyo- ne, especially those who are mainly interested in holding cryptocurrencies as an investment and not interested in actively trading these assets.
As for mobile apps where you can keep your di- gital currency, some of the most popular include: Copay (iOS & Android), breadwallet (iOS) and Mycelium (Android).
The second kind of storage for digital currency is known as “cold storage.” This means that they maintain their security of ine. If there is no connec- tion between the wallet and the internet, hackers cannot steal funds from the wallet. The hot wallet, on the other hand, remains susceptible to attack, which is why users should only store a minimal amount of funds in it.
The most common cold storage is a hardware wal- let such as the Trezor or the Ledger Nano. These rugged little USB-friendly gizmos of metal and pla- stic are becoming popular as portable physical vaults. They are small devices that look something like hybrids of ash drives. They are considered the absolute most secure for storage, sending and receiving transactions online.
“Paper wallets” are another kind of cold storage that can securely hold Bitcoins. You can store this form of wallet in a safety deposit box along with your other valuables. To generate a paper wallet, sites like Bitaddress.org or Blockchain.info can be used to create the QR code and alphanumeric se- ries. Once they are generated, you can print them out on a piece of paper.
One way of understanding the kinds of wallets is to think of a hot wallet as a checking account, while a cold wallet is like a savings account. The best scenario might be to keep most of your digital coins stored in a cold wallet of ine and have spending money in the hot wallet.
The most common and perhaps trusted type of wallet for cryptocurrency storage might be called “warm storage” and is a “core” wallet, of cially af- liated with the speci c type of cryptocurrency you are holding. This kind of wallet lives on your desk- top/laptop as its own app and usually connects to the entire blockchain of its cryptocurrency once it’s connected online.
Unlike wallets on exchanges or sites like Coinbase, your private keys are never exposed to a third party as they are stored directly on your computer and password protected. For instance, the Core Dash Wallet is standard for holding Dash (DASH). This is because this software was speci cally designed to accommodate DASH cryptocurrency. Unfortu- nately, the Dash Core Wallet can only store, send and receive Dash, which is the case with most core wallets, necessitating the use of exchanges, hence further complications in use. Very few desktop wal- lets handle multiple cryptocurrencies.
Even most cryptocurrency mobile app wallets are limited to a few kinds of coins. As recently as June the 10th, a security bug was found on the popular multi-coin wallet, Jaxx. Make sure you check online for reviews of a cryptocurrency wallet before trans- ferring your coins to it.
Be sure to keep your passwords in a safe place, preferably written on a piece of paper and stored in a safe place. Never take a screenshot of your passwords as these may be discovered by a thief who has stolen your phone or laptop. Remember that emails may be hacked and information such as passwords stolen. As with all wallets, virtual and physical, be careful and stay safe!
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