How to Store Bitcoin? – Concept, Types, Safety, Bitcoin Wallets & more
It’s no surprise that you’ve already read hundreds of articles to get the answer to the simplest question, “How to Store Bitcoin?”
Although it is also possible that you have liked a few options, but are they trustworthy? Of course, it is hard to predict until you try them, but it can be risky though.
Hence, if you are also on the hunt for the safest option to store your bitcoins, just get into this article and find out.
Bitcoins are considered one of the most valuable digital currencies in the world. But when it comes to storing Bitcoins, lots of opinions revolve around us.
Every person has a suggestion to give that can’t be viewed as a completely effective approach because they themselves aren’t entirely confident about it.
Therefore, if you are on the hunt for the best approach that you can choose to store your Bitcoin, this article has something interesting for you.
Why Store Bitcoins?
Over the last couple of years, Bitcoin has made headlines while surpassing all of its previous highs. Hence, new investors are increasingly drawing towards Bitcoins.
They enter the game, but meanwhile, the next biggest challenge of storing bitcoin crops up.
It is an essential point because it protects your investment from hackers.
Especially if your invested amount is big, it is the most critical point to note down in your list and secure your investment.
However, the whole concept of storing bitcoin is relatively easy to understand.
It is similar to any secure port where we secure our physical currency. For example- we store paper notes and coins in banks.
Similarly, Bitcoins are stored in a digital wallet. A digital wallet can be either web-based or hardware-based.
The user can securely store their currency in these wallets and, whenever required, can get access to these wallets through their mobile and computer devices.
But are these wallets safe? Let’s find out.
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Are Digital Wallets Safe?
No wonder, after knowing the importance of Digital wallet, the next most prominent debatable subject is, are these wallets safe?
Well, it entirely depends upon the user. An effectively managed wallet can stay safe from any threats.
But the challenge doesn’t end here. The easiest way for a hacker to steal your cryptocurrency goes through that private key that you receive from the system while creating your bitcoin wallet.
Hackers can easily use this key to get access to digital currency.
If your private key has been stolen unexpectedly, you will have no way to get access to your wallet. Even though your system has been physically damaged or hacked, the fear of losing bitcoins can be very obvious.
So what are the safest ways to store your bitcoins? Next, we will discuss it.
Types of Wallets for Storing Bitcoins
There are mainly two types of wallets. The first is categorized as Hot Wallet and Second Cold Wallet that people often use to store their cryptocurrency. But what does it means?
The term “hot wallet” is used for online wallets. Since these wallets are online, so they run only on internet-connection.
This means one can get access to these wallets through mobile and computer devices.
While creating a “hot” wallet, the user receives a private key that one must keep secure. It is a prompt method for an anonymous person to access your bitcoin account and steal the currency.
But in terms of convenience and flexibility, hot wallets can be a better alternative. You can seamlessly make transactions; you can buy and sell assets without any hassle.
However, these wallets can’t be viewed as a secured option because the budding online threats raise concern for people who rely on these wallets.
Hackers can easily steal entire currency from these wallets. Even though you never reveal that private key to anyone, hackers can illegitimately attack your wallet and steal your wealth.
That’s why it is always recommended not to store your entire currency in one wallet.
Instead, you can store the rest of the amount in your cold wallet. However, you can use the hot wallet for frequent transactions only.
It’ll always keep you in a safe position, as you can better utilize your bitcoins.
Still, it is always recommended to keep your wallet updated with the latest version, else hackers can easily drain your wallet.
There is another variant of Hot Wallet, known as Software Hot Wallet.
Software Hot Wallet
Software Hot wallets are somewhat similar to the standard hot wallets, with the slightest difference that these wallets are downloadable applications.
Usually, these wallets have no connection with the exchange. That’s why the user maintains its private key, which means the users can feel secure about their account.
But it doesn’t consider this option the safest approach. Still, your wallet can be hacked with a modest mistake.
Remember, you are still dependent on the internet, and using software, hackers can quickly gain access to your wallets.
That’s why many users prefer using the cold wallet option, as it is the safest alternative to store bitcoin.
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Cold wallets are unlike online wallets as they don’t seek internet connectivity. Accordingly, these wallets are considered the safest wallet option.
Comparatively, these wallets are less risky. It is an offline approach to store your cryptocurrency without the fear of being stolen by hackers.
Cold wallets store the private key and address of the user on their system. Since these systems are not connected to the internet, hackers can’t access a user’s wallet.
The most significant advantage of storing bitcoin in a cold wallet is, they are unaffected by viruses. Still, these wallets have a few downsides.
Such as – these wallets seek knowledge of the users, and at some points, cold wallets can’t be a convenient alternative that makes it a not so cool option for the frequent transaction.
It can be very irritating, though. Still, if you want to store a massive crypto-currency in your wallet, you can consider this offline approach.
Cold Wallet is also split into different categories so that you can pick the best methods for you. These are as follows:
A paper wallet is the safest offline method and known as one of the most prominent variants of cold wallets.
Users opt for this method in which they generate a private key and receive it in a printed form on paper.
But this paper should be kept secured; else, you can’t get access to your Bitcoin wallet. So as soon as you receive that paper, laminate it and secure it at a safe place, completely untouched.
It is the best cold wallet method that ensures the robust protection of your currency. You also get a QR code on the printed paper. Simply scan it, and make an instant transaction.
No wonder this approach has brought easiness in the Cold Wallet options as the user is only required to show QR code to the system without putting in additional efforts.
Still, it is advisable to have a duplicate copy of this paper wallet.
In case if your paper wallet gets damaged or lost somewhere else, this duplicate copy will be available there to take you out of the trouble.
As the name sounds, these wallets store coins in the USB drive. It can be a convenient method because you can carry the drive in your pocket and use it anytime, whenever you want.
But in most instances, its small size does not take a while to turn into its major shortcoming. If you don’t want someone to use your wallet illegitimately, take care of your drive.
Apart from that, they are flexible to use and the best choice among many bitcoin users. It is a famous offline method to store bitcoins.
Modern USB drives come with more robust features; they are waterproof and safeguard your wallet from virus attacks.
Any time you can send and receive currency using this convenient method. But make sure you are using a reliable computer; else it can steal the entire data.
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Undoubtedly, this wallet category can be unique to you because it is an extraordinary approach that hardly a few people use.
In this offline method, the sound keeps the users’ private keys in a secure and encrypted sound file. For example- these can be stored in compact disks and vinyl disks.
However, you can also call it one of the smartest methods because a user requires a spectroscope to listen to the audio and get the code hidden in these encrypted audio files.
Still, it is always recommended to listen to the audio using headphones and make sure that no one is around.
FAQs on Bitcoin Storage or Bitcoin Wallets
Here are few very important questions generally asked by bitcoin investors –
What is the convenient wallet to store Bitcoin?
If you want to store your coins in a convenient wallet to make frequent transactions without any hassle, you should undoubtedly choose hot wallets.
In this, you get two options, either use mobile or desktop to make transactions. You can also download some helpful applications for instant transactions.
But, it can be risky though, if your device isn’t secure or you don’t use any antivirus software that protects your device from unexpected threats and malware attacks.
These wallets demand internet connectivity. That’s why these are not recommended for long-term vision.
What are the Best Long-term wallets to store Bitcoins?
Users who want to store coins in wallets for the long term can choose cold wallets. In such wallets, you can either secure your wallet in a USB drive or in the form of a sound file.
Since they are physically stored, so you can keep them along with you for a long time.
Many people use this smartest approach because it safeguards their digital assets from malware attacks and hackers.
Moreover, the paper wallet is a convenient approach as you get a QR code in it that you can also use for long-term storage purposes.
No wonder this wallet option is an excellent choice for a long term purpose.
For instance – if you have no plan of using your crypto-currency for a long time, you can choose this alternative. Else you can choose an online approach for frequent transactions.
Should I store Bitcoins on an Exchange?
Freshers who have recently started using Bitcoins often become a bit confused about whether they should use the exchange to store bitcoins or not.
It’s no surprise that exchange is a popular destination among new people who want to buy Bitcoins through a simple process. That’s why most people never hesitate to store their coins in exchange.
But it can be the riskiest alternative, as in this way, you give exchange access to your wallets. This means they will be controlling your funds. It also raises the risk for your account.
Possible that you become a victim of fraudulent activity, as the exchange can cheat with you as well.
So make sure you use exchange only for trading purposes. For storing bitcoin, you can use between cold and hot wallet alternatives.
How to Store Bitcoin? – Conclusion
No more, you need to raise the question of how to store bitcoin? Because in this article, we’ve answered it thoroughly.
Which option you can choose for the frequent transaction, and how it will work for you? We discussed everything in detail.
You can use hot wallets for trading purposes or to make frequent transaction throughout a day. Apart from that, you can choose the best options from cold wallets, in which you get a different selection. For a long term purpose, a cold wallet is a good option.
However, both options come with few downsides, whereas at many points, one wallet is better over another. That’s why the ultimate decision is up to you.
For which purpose you want to use Bitcoins, and how long you want to store your Bitcoin? In both wallet categories, your private key is the most valuable subject.
So make sure you safeguard it and don’t share it with anyone. Else, you can put yourself into big trouble.
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