Who Wants to be a Crypto Millionaire?

By Kasey Hinton | February 22, 2019

Do you want to be the next crypto millionaire? Keeping your cryptocurrency safe is crucial to financial success!

Learn more about safely storing your crypto. Getting started in crypto requires a good understanding of storing cryptocurrencies in a secure way.

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Get a wallet, lock it up, and don't throw away the key

Getting started in the cryptocurrency space first requires a good knowledge of safely storing cryptocurrencies. This is to ensure no funds are lost at any stage. Cryptocurrency funds are stored in wallets. Unlike a physical wallet which stores cash, a wallet does not store cryptocurrency funds. Rather, it provides a secure way to interact with your funds which exist on the blockchain. Wallets, therefore, are interfaces to your funds, allowing you to send and receive cryptocurrencies. A comparison can be made to an online bank account. In online banking, you can see your funds and transfer your funds, however the money itself exists in the bank. Online banking is simply a way to interface with your funds.

Hot n Cold Wallets? Katy Perry style..

Wallets can be either hot wallets or cold wallets.

Hot wallets are wallets that are connected to the internet in some way. These can be wallets that exist on a desktop, mobile phones (many apps wallets have been created), on an exchange or on a website. Hot wallets are generally seen as less secure. When your wallet is connected to the internet, there is the possibility of keyloggers or phishers who could possibly steal funds. These vulnerabilities exist due to the nature of wallets exposed to the internet. Funds that exist on exchanges are particularly vulnerable, as that means trusting a third party (the exchange) to store the funds securely.

Cold wallets on wallets that operate offline, disconnected from the internet. This is known as cold storage. Examples of cold wallets include Ledger Nano and Trezor devices. These are devices specially designed for storing cryptocurrencies offline. These are seen as more secure as they are not connected to the internet. The one major drawback to cold wallets is that they are not able to store every coin. Many coins that use special encryption may not be immediately available for storage on these devices. However, many of the biggest coins such as Ethereum and Bitcoin are able to be stored on cold storage quite easily.

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Help, I've lost my crypto fortune

A wallet recovery phrase is the most important part of any wallet. This is a sequence of words that must be kept secret at all times, as it can restore lost funds. If a hardware storage device is lost or broken, or a PC in which a wallet was stored breaks, then funds can be recovered instantly through this secret phrase. This is extremely valuable, so it must be kept highly secret.

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