With last year’s speculative fever pitch receding into the past, cryptocurrency enthusiasts are getting back to simply accumulating crypto. And if you’re accumulating Bitcoin or another cryptocurrency the best practices having your funds in a wallet whose private keys you control.
When your tokens are on an exchange they’re not really yours because someone else possesses the private keys which control them. Not only is this not fulfilling the original cryptocurrency vision of monetary sovereignty, it is dangerous. You should expect any exchange to eventually be hacked. As of this writing the latest big exchange to be hacked was Bithumb, the Korean exchange hacked to the tune of $30 million dollars. Luckily for Bithumb users, the exchange is compensating their users, but that may not always be the case.
Besides keeping your funds on an exchange or a soft wallet, another—very secure—option is a paper wallet. A paper wallet just means there’s a set of keys written down which have never been online. You can keep this physically secure and send money to its corresponding address to store Bitcoin. While more secure than other options, this is the least convenient option available in a case where you do want to move your holdings.
A great median between safety and convenience, however, is the hardware wallet. These take the form of a thumb drive which holds your private key and uses apps to interface with the network. Your private key is never exposed online, which portects you from many easy hacks. The most popular wallets are made by Ledger and Trezor, and Trezor’s code is open source so the community can audit the code themselves.
One of the best ways to get Bitcoin to your hardware wallet and avoid exchanges is to use Bitwage and get part of your salary paid to you in Bitcoin directly to any address (or multiple) you designate. Once you set your direct deposit with Bitwage you’ll start getting Bitcoin to your hardware wallet with every paycheck without your employer even having to know you’re paid in crypto. Check out this article to see how it works.
*Photo by: Sarah Pflug *