|Company||Wallet type||Purchase costs||Integrated exchange||Compatible hardware|
Steps on how to store cryptocurrency in a paper wallet
- Step 1: Go to a computer that you know is free of malware. If you can afford it, buy a new PC for this step. The reason is that generating credentials for a paper wallet with an infected computer makes your wallet vulnerable and insecure to crypto.
- Step 2: Visit a paper wallet generator site. These free sites can help you generate the credentials you need, such as the private and public keys, in seconds.
- Step 3: Generate an address. Select the number of addresses you want to generate and click ‘generate’. Some sites can generate up to 10,000 addresses at a time.
- Step 4: Print out your paper wallet. Since you want to keep your crypto offline, a common method is to print and fold the wallet with the crypto address on the outside while the private key is inside the inner flap. This makes it more difficult for someone to see your private key at a glance.
- Step 5: Send crypto to your paper wallet. After sending your cryptocurrency, keep the wallet in a safe place away from potentially harmful elements such as moisture and heat. Since crypto is virtual, you can send crypto to any wallet, be it paper, digital, or physical, as long as you have an address to use.
What you need to open a cryptocurrency account
Opening a cryptocurrency account is quick if you have the necessary details. With a few wallets, you can even open multiple user accounts on the same wallet. Remember that you must provide the necessary KYC data; these details help exchanges and wallets keep money laundering and other financial crimes under control.
Examine the Cryptocurrency account
Doing background checks before signing up with an exchange/wallet is crucial. These checks will save you a lot of headaches and prevent you from falling into the hands of scammers posing as legitimate business owners. The first place to look is the company’s website. There are several questions to ask, including:
- Does the website look suspicious?
- Does the URL match the name of the company?
- Who runs the exchange?
While many things are anonymous in the crypto world, wallet/company owners rarely are. If you’re happy with the authenticity of the company’s website, head over to social media to see official social media handles. Also watch for any red flags and listen to what other people are saying about the company. Do many people say it is inefficient?
To use a cryptocurrency wallet/exchange for the first time, you need to sign up with some details and documents to give the exchange some background information about you. This is the information most exchanges require:
- Date of birth
- E-mail address
- phone number
- Home address
- Citizen service number
- Driving license or passport
Understand the basics
Since cryptocurrency is money, it should be kept safe: away from hackers, scammers and other bad actors. If these people get their hands on your crypto, they can send it to another wallet or sell it for money, leaving you with nothing. When choosing a crypto wallet storage option, consider one with a security system that makes it difficult for anyone to hack into your wallet and steal your assets.
There are several types of secure wallet options you can work with, including crypto exchanges, cold storage wallets, paper wallets, and hot crypto wallets. If you want faster access to your crypto, choose a crypto exchange or a hot crypto wallet. If you want to focus more on security and storing cryptocurrency offline, cold storage or paper wallets are ideal options.
A crypto exchange is an application that allows you to access crypto and conduct crypto-related transactions. Most wallets are free to download, but incur transaction fees for sending or selling cryptocurrency. Coinbase, Binance, and Kraken are all popular examples of cryptocurrency exchanges.
Cold storage wallet
A cold storage wallet is a type of wallet that is not connected to the internet. With these types of wallets, your crypto is safe from hackers, so they are ideal for storing large amounts of cryptocurrency. Many users go for Trezor and Ledger.
Hot Crypto Wallet
Unlike a cold wallet, a hot crypto wallet is connected to the internet. That means you need an internet connection to access your cryptocurrency. While these wallets are more susceptible to hacks, they make it easier to access your crypto for transactions on a regular basis. There are tons of popular crypto wallets on the market today, but Guarda and Mycelium are good choices based on security.
Although paper wallets are now being phased out, they are still practical for storing cryptocurrencies. A typical paper wallet has your private keys and your address printed on it. Paper wallets are relatively safe, but if the paper is stolen or lost, the thief can easily read your keys and take your crypto, otherwise you will lose your crypto forever.
Know the risks
No method of storing cryptocurrency is 100% secure, even with the various security measures.
Risks of storing cryptocurrency on an exchange
Storing your crypto on an exchange is often seen as the easiest way to keep it safe, but you can also quickly lose it to hackers. If your exchange is attacked, you could lose your crypto permanently, even though your passwords and private keys are safe.
Risks of a Cold Storage Wallet
Typically, cold storage is the safest way to store your crypto away from online hacks and security breaches. But you can also lose your crypto, especially if your device is lost or stolen. In addition, water or fire damage can permanently cause your crypto to go down the drain, especially if you have not backed up your seed phrase.
Risks of a Hot Crypto Wallet
Hot crypto wallets pose almost the same risk as storing crypto on exchanges. However, they are relatively safer. If your device is hacked or you accidentally install malware, your wallet can be completely drained.
Risks of a paper wallet
Your paper wallet is very vulnerable to physical damage or wear and tear. These wallets are quite cheap, but they are easy prey for attackers. The attacker just needs to get hold of the paper to rob you. So even if you have copies of the paper wallet, it doesn’t help much since your private keys are on every copy you print out or keep as a soft copy in your device’s storage.
Factors to consider when opening a cryptocurrency account
Security: Review an exchange’s security features before creating an account. We recommend choosing one that offers two-factor authentication or an extra security measure beyond the usual password feature.
Cost: Many exchanges charge a small fee for sending, selling or buying cryptocurrencies. If you want to trade cryptocurrency often, it is best to choose an exchange with moderately low fees to save you the extra money you spend on fees.
Number and quality of cryptocurrencies supported for options trading: If your goal is to trade various crypto assets, you should choose an exchange that offers more than just BTC and Ethereum (ETH).
Storage and safekeeping: Using a custodial storage option like a hot crypto wallet is better if you are not too good at keeping passwords and passphrases. These options hold your cryptocurrency for you and can help you recover your password if you forget it.
Customer service: While many exchanges have a customer service center or an email to reach them in case of any issues, it’s better to choose one that has a live chat option. Those have faster response times and can come in handy for wallet-related emergencies.
Frequently Asked Questions
How do you store large amounts of cryptocurrency?
You can store large amounts of cryptocurrencies on any storage method, but it is best to store them in cold wallets. Cold wallets are the safest option and can store any amount of cryptocurrencies for a long time.
Can you store cryptocurrency offline?
You can store cryptocurrency both online and offline. Offline storage options include cold storage wallets and paper wallets. Nowadays, people rarely use paper wallets. You must have a solid, secure, cold wallet to keep your crypto offline.
Are cryptocurrency exchanges safe?
Cryptocurrency exchanges are not completely safe. An exchange can be easily hacked and your wallet can be part of those affected. You should especially store crypto on exchanges if you do a lot of crypto transactions or trade crypto.
Can you store multiple cryptocurrencies in one wallet?
Yes, you can store multiple cryptocurrencies in one wallet. Many cryptocurrency wallets and exchanges automatically create separate wallets for as many cryptocurrencies as they support. In some cases, you may need to manually add a new wallet for the new cryptocurrency you want to store. The best wallet to store all cryptocurrency is a cold, portable and secure wallet.
What are the Different Types of Cryptocurrency Exchanges?
A centralized exchange is a cryptocurrency trading platform where you buy, sell and transfer crypto using an intermediary (the exchange). These exchanges help you with crypto transactions for a fee; however, your crypto can be used by the exchange for personal use, which is what happened with FTX. To access an account with a centralized exchange over the Internet, you usually need a password or PIN. Apps allow you to access your account regularly with little or no security.
Decentralized Exchanges (DEXs) are being created to eliminate the control and need for a middleman. Instead, they operate on smart contracts and do not hold your crypto for you. With DEXs, the exchange cannot access or misuse your cryptocurrency. To use these types of exchanges, you need to keep your crypto separately in another wallet and connect it to the decentralized exchange (DEX) when you want to transact. Once done, immediately disconnect your wallet from the site for security reasons. While decentralized exchanges are more difficult to use, they are more private and can help you transact anonymously since they do not require KYC.
A hybrid exchange combines the features of both centralized and decentralized exchanges by allowing you to conduct large volumes of trades. However, some hybrid exchanges require KYC for large transactions. With these types of exchanges, you are sure of faster transactions as users are linked together on a decentralized database.