Seth started his cryptocurrency investingnin 2018. He is currently working towards his series 65 to become a financial advisor
Storing your cryptocurrency safely and securely is one of the most common mistakes in this space. At first, it can be confusing, stressful, and seem complicated. This is by far one of the most important aspects of investing. What good is your crypto if it can get hacked and stolen? Why would you invest your hard earned money and not protect it? You shouldn't!!! One of the most important phrases I tell people,
"NOT YOUR KEYS, NOT YOUR CRYPTO!!!"
Do not keep assets on exchanges for any more time than it takes to clear that exchange. For example, I get verified and buy 100 dollars of a digital asset on coinbase mobile app, I use the ACH bank transaction using my bank account. You can then trade your assets on Coinbase instantly, but you won't be able to send for 3 business days due to AML compliance (anti money laundering). There are different ways to avoid getting hacked or frauded. If for some instance Coinbase got hacked, all of your information would be compromised. Your assets could be stolen, and sometimes even your bank account info. Therefore, I keep a separate bank account strictly for trading. I only fund that account when I'm ready to send money to an exchange to buy crypto. I always make sure to send my assets to my cold wallet as soon as possible. There are a few different types of wallets:
1. Cold wallet
2. Mobile wallets
I use cold storage for most of my portfolio. I use it for long term holds. It is completely secure, because you own the keys. If you wanted to get my funds you would have to have me, my ledger, my passcode, my yubi key, and my cell phone; it's virtually quantum proof.
I use mobile wallets for preset small amounts to cash out on my preset exit points. I can immediately send to an exchange and sell for either a stable coin or for fiat. There is naturally more risk here as all you would need is my pass code, my authentication password, and my cell phone.
Let's talk a little bit more about your keys, or seed phrases. When you buy a cold storage hardware wallet or install a mobile wallet they give you a seed phrase or key phrase to back up that device or app. This is usually a 12 or 24 word code. This seed phrase or key phrase directly gives you access to your assets on the blockchain. So, if I destroyed my phone, computer, hardware wallet, internet crash, or all of the above, I still have my keys.That gives me access to my assets on the blockchain. I can just put in my seed phrase or keys, and get my assets. If you lose, misplace, or destroy your seed phrase, your money is gone forever. Keep these backup keys very, very safe. I recommend multiple copies, in multiple places, and all under lock and key. A safety deposit box at a bank will probably be the most secure.
My personal favorite hardware wallets/cold storage is the Nano Ledger S. There's multiple mobile wallets just make sure to do your own research. I also recommend using a VPN to keep your devices secure and safe.
This content reflects the personal opinions of the author. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters.