A lot of people are asking, ‘do I need a crypto wallet to store Bitcoin?’
It makes sense to keep your paper money in your wallet for safekeeping, and you might think that it’s the same for cryptocurrencies. Outlined below will be the answer to the question.
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I Bought Some Bitcoin. Now What?
Bitcoin is a popular digital asset that can be bought online. Cryptocurrency exchanges operate 24/7, and these websites offer to give you some Bitcoin in exchange for cash.
You create an account, then register to purchase Bitcoin with a credit card or bank transfer. Now what will you do with the Bitcoin you own?
Keep Your Crypto at the Exchange
One option to store cryptocurrency is to keep it on your account at the cryptocurrency exchange platform.
The most reputable sites will have technology, such as cold storage, hot wallets and custodial accounts to secure their customers’ cryptocurrencies.
A hot wallet is a term used to indicate that your crypto coins are ready for trading anytime you want. The platform can also keep your coins at FDIC-insured banks. Lastly, cold storage is when your cryptocurrencies are put in wallets that aren’t online.
As a side note, you’ll have to take care of your crypto exchange account as it might be hacked, and your Bitcoin stolen or transferred. Never give out your password to anyone even if they claim to be from the exchange.
Set Up Your Own Wallet
Your crypto exchange account will have a wallet that’s custodial, which means you and the platform owner has a degree of control over your coins.
If this doesn’t sound too great, then you can set up a wallet yourself so you get full control over it. Here, you can store the security keys, or codes that indicate you’re the owner of a certain amount of Bitcoin. For this you have three choices- a software wallet, hardware wallet or paper wallet.
Paper wallet. The keys generated by the exchange is simply written down on a piece of paper.
Hardware wallet. The keys are kept in a device, such as a flash drive or HDD.
Software wallet. The keys are kept in a software in your computer or smartphone.
The Decision is Yours
Leaving your Bitcoin at the exchange or putting it in a cryptocurrency wallet has its own set of pros and cons.
You will need to determine the reason why you bought Bitcoin and what you intend to do with it. Traders will usually prefer to keep their assets in the exchange since it’s liquid and can be moved at any time they want.
However, those who are in it for the long term will want to opt for cold storage or their own hardware wallet. It’s the most secure since it’s impervious to hacking and as long as you keep the storage offline.
To make the most of your cryptocurrency investment you’ll want to check out bitcoin lifestyle. It has everything you need to start trading for profit and maximize your earnings.
