Bitcoin is so far the most valuable cryptocurrency in the world. Although it did not immediately pick up after its launch in 2009, the crypto grabbed many people’s attention in 2017 when its value skyrocketed to unprecedented levels. It later dipped but since 2019, Bitcoin has continued to increase its value.
Considering the fact that Bitcoin is relatively a new concept, many people still don’t know how to safely keep their investments. Hackers are always coming up with new tactics of stealing funds from unsuspecting individuals. There are instances where hackers have been able to reroute tokens being transferred from one wallet to another.
Similar to the way cash is stored in a wallet, bitcoins are also kept in a digital wallet. The digital wallet can be web-based or hardware-based. It can also be found on computer desktops, mobile devices, or by printing out the private keys and their addresses.
One of the worst mistakes you can make is to lose your bitcoin private key. Besides, it is also possible to lose bitcoin in case your computer malfunctions. But storing cryptocurrency by SoFi makes your funds more secure compared to other platforms.
Here are some of the safest ways to store Bitcoin:
1. Hot wallet
Online wallets are commonly known as hot wallets. They are wallets that operate on internet-connected gadgets or devices such as phones, tablets, or computers. They can be vulnerable since the devices are the ones that generate private keys for your bitcoin. Although hot wallets may be convenient when it comes to accessibility, they are less secure.
It may not be common but individuals using hot wallets are at a higher risk of their bitcoins being stolen compared to people who use other storage methods. It would be wise to hold a smaller amount of bitcoins in a hot wallet because of the risk involved. The other option would be to hold your cryptocurrency in an exchange wallet.
2. Cold wallet
This is another great option of storing bitcoins, in fact, it is considered one of the safest methods. In simple terms, a cold wallet is not connected to the web – meaning the chances of your bitcoins being compromised are very minimal. Cold wallets are also known as offline or hard wallets.
The wallets store your private keys and address on a device that’s not connected to the internet. It usually comes in software that operates in a parallel manner to allow a user to check his or her portfolio without exposing the private key.
3. Physical coins
There are a number of services being introduced that give Bitcoin investors an opportunity to purchase physical Bitcoins. The coins bought have a tamper-proof sticker showing the predetermined amount of bitcoin. You may be required to pay a slightly higher amount than the actual value of the bitcoin you are purchasing.
Bitcoin and other cryptocurrencies have emerged as great investment assets. They have also proved how they can easily function in place of traditional currencies. But as an investor, you need to understand different ways of storing your bitcoins safely.