Best Ways for Coin Storage to Protect Your Cryptocurrency

As the price of Bitcoin and other cryptocurrencies continues to soar, news of people who have lost access to their crypto stash is always hitting the headlines. Recently, Stefan Thomas, a German-born crypto enthusiast, made news when he had only two attempts to his password for him to access his 7,002 Bitcoins worth millions of dollars. Sadly, Stefan had lost the paper containing the seed phrase needed to unlock his wallet. The issue of private key storage is a major concern for all stakeholders in the crypto industry. Since crypto transactions are done online, there’s always a security risk. Crypto exchanges are prone to hackers and 51% attacks which can lead to loss of one’s fortunes. In this write-up, we will take a closer look at coin storage options, and ways to keep your assets safe. Let’s proceed, shall we?

What are Private Keys?

In non-technical terms, a private key is a password containing numbers and letters that allows you access to your cryptocurrencies. Think of it as a digital signature. The foundation of the crypto ecosystem is cryptography that involves encoding and decoding data without the need of a third party. For this to happen, each user needs a public address and a private key to transact Bitcoin and other altcoins.

Due to the increased number of people who have lost their crypto fortunes on exchanges and hot wallets, it’s always advised to store one’s stash offline.  When you create a wallet, you are issued with a private key that has a unique alphanumeric combination used for coin storage which is hard for hackers to crack.

Why is Safe Coin storage Important?

Cybersecurity is a major concern to the digital generation. There’s the constant threat of hacking, phishing, scams, malware and viruses. To stay safe, you need control over your private keys. There’s a common mantra in crypto: ‘not your keys, not your crypto’.

In short, anyone with access to your private keys can access your funds. The reason why cryptocurrencies have experienced explosive growth is because of their decentralized nature where people have control over their finances.  Making informed decisions when it comes to coin storage can make all the difference to the safety of your crypto assets. There’s a lot of curiosity around where private keys are stored.

How Do Private Keys Work?

There are two aspects of blockchain technology that allow a transaction to take place. To receive or send tokens, you need a public and private key. When you start a crypto transaction, a public address is generated which is encryption that’s accessible to everyone.

Once you receive tokens, you need the private key (unique to you) to access the asset. Note that the public key is generated from the private key through a complex mathematical algorithm. The security measures taken in the generation of a private key make it difficult for hackers or any unauthorized entities to gain access to a wallet.

Common Ways of Coin Storage

As the crypto space continues to mature, the market is constantly receiving numerous and safe ways to help people with private key storage. Let’s explore 5 common methods that you can use:

1. Wallets – These are the most common ways that people use for storing coins. The four common types of wallets are software, hardware (cold), paper and online wallets. The safest is paper wallets where one creates a public key on an online platform, prints it and stores it. Hardware wallets provide offline storage of coins and have buttons to enter the pin. They use USB to connect to a PC. Software and online wallets allow one to store coins on the web.
2. Seed phrase – Another common coin storage option is using a unique phrase containing simple word combinations. Once generated by a wallet, one needs to write the phrase down and use to access their funds even when one loses their smartphone or laptop.
3. Cryptosteel – Providing a long-lasting solution to coin storage, Cryptosteel uses over 90 characters containing private data. The randomized characters provide additional security to the key. Available in a capsule or cassette, Cryptosteel is a portable and flexible coin storage option.
4. Secure Wallet – For this storage option, one uses an offline device which acts as hot and cold storage. It appears like a bank card and one uses an app to connect.

Coin storage for Different Coins

Storing private keys may vary from coin to coin. You will find wallets that only store Bitcoin and generate keys based on that. Let’s look at the storage of private keys for the top 5 cryptocurrencies:

Bitcoin Coin Storage

• Download a Bitcoin wallet
• Register and provide the necessary details.
• At this point, you will be prompted to write down the generated seed phrase.
• Proceed to transfer your Bitcoin to the wallet
• Back up the seed phrase. You can use a pencil and paper or you can use a metallic backup.
• Store the backup in a home safe or in multiple safe locations.

Ethereum Coin Storage

To store Ethereum, you will need MyEtherWallet to safely generate private keys. Here’s the process involved:

• Create a MyEtherWallet (MEW)
• Once created, click on the Back Up Now’ option
• Go to settings and view the recovery phrase
• Write down the 24 words on the phrase in the exact order they appear
• Store the written phrase in multiple places since its loss means losing your Ethereum

Litecoin Coin Storage

To safely store your Litecoin, you need to use the Litecoin Core (Litecoin QT) wallet for advanced users or Electrum LTC for beginners. The  use of Litecoin Core to store your Litecoin private key involves:

• Download and launch the Litecoin QT wallet.
• Backup the wallet
• Unlock the wallet if it’s encrypted
• Proceed to import the Litecoin private key and destroy any old wallet where Litecoin was stored.

Ripple

Ripple uses the XRP Ledger wallet to provide its users with a private key. To store this key:

• Go to GateHub.io
• On the wallet option, click Advanced
• Choose the ‘show secret key’ option’
• Write down the 29-character string that appears
• Store the private key in  a safe place

Dogecoin

To store your now popular Dogecoin, you need to use Multidoge which is the official Dogecoin wallet.

• Download the Lite desktop version
• Register and log in
• On the wallet option, you will find the private key
• To export the private key file and store in a safe place.

Other Security Precautions for Private Keys

In addition to having a cold or hot wallet, you need to perform regular security checks to ensure your private keys are safe. As part of your coin storage strategy, you need to:

• Carry out backups – You need to constantly backup your private keys. Having only one copy of the key is risky in case of accidental loss or damage on your wallet.
• Update the software -If using an online wallet, always update it regularly. Carrying out updates ensures you are protected by the latest security features that come with the version.
• Have multi-signature sign in – For added security, you can use crypto wallets that need two or more private keys to access funds. A multiple signature wallet (commonly called multisig) comes with a stronger cryptographic protection for your coins.

Top Tips for Storing Private Keys

It’s possible to memorize a phrase containing your coin information. But is this the best coin storage strategy? Let’s explore some tips on the best ways to store private keys:

Invest in Hardware Wallets

A hardware wallet allows for cold storage of private keys. When selling a large amount of Bitcoin, you can easily access it from a hardware wallet and send it securely to the recipient. These wallets resemble USB drives and are easily portable.

Don’t Store Private Keys Online

It’s highly advisable never to store your private keys online including on Gmail, Dropbox and other cloud storage options. There’s always the threat of cyber attacks and hacking is getting sophisticated by the day.

Use an Encrypted Device

If you feel that hardware wallets are out of your budget, then you use a flash drive or hard disk for your coin storage. Put encryption on the offline device which will always prompt hackers or unauthorized entities before accessing your assets.

Invest in a Paper Wallet Software

Something as simple as writing your private key on a piece of paper is free but quite effective. As an added measure, you can invest in paper wallet software that lets you safely print out your private key.

Add your Coin Collection to your Will

Cryptocurrencies are valuable assets. It’s important to inform your lawyer about them and make sure they are included in your will. You can then provide details on how the coins can be recovered in case of any eventuality.

Top 6 Wallets to Store Cryptocurrencies

As a crypto enthusiast, wallets are a favourite for storing cryptocurrencies. Whether you commonly transact on platforms such as Coinbase or Binance, you are strongly advised never to leave your crypto assets on an exchange. With millions of wallets out there, let’s narrow down to the 5 best crypto wallets and what makes them special.

Ledger Nano S

If you are looking for a hardware crypto wallet, then Ledger is a leading brand. The wallet boasts advanced security features. One can trade, exchange and, manage over 1500 coins on the wallet. In case you delete the Ledger software, the developers have created Ledger Live which provides users with an interface to access cryptocurrencies.

Exodus

Another popular Bitcoin wallet is Exodus that’s compatible with over 100 cryptocurrencies. It allows one to manage crypto on their desktops or on the go using a mobile app. As an added security feature, one can integrate their Exodus wallet with Trezor for offline storage. It has a simple and user-friendly interface that makes it a great choice for beginners.

Trezor

Trezor hardware wallet is considered a safe place to store your coins. Its intuitive user interface provides a seamless experience while its advanced security features such as pin and password entry ensure maximum coin storage. Other extra security features include U2F authentication, FIDO2 authentication, encryption using GPG and a password managed. One is also provided with a recovery seed phrase in case of accidental loss.

Trust Wallet

As a leading wallet, Trust provides you with a straightforward way to transact cryptocurrencies, collect NFTs and other amazing features. Better yet, users can conveniently earn interest on their crypto and quickly exchange coins without leaving the application. With up-to-date charts, users can also track the prices and performance of coins.

The wallet doesn’t collect any personal data and on registration one is provided with a private key in the form of a seed phrase to access your crypto. Trust wallet also has a browser where you can search for decentralized apps (DApps).

MetaMask

As a leading storage option for ERC-20 tokens, MetaMask has witnessed a massive growth in the number of downloads. The increased demand for decentralized Finance (DeFi) has made the wallet popular as people look for a safe place to store their tokens. Available as a browser extension and as an app, Metamask provides a flexible way to manage one’s tokens. It provides a user-friendly interface to store and swap Ethereum and ERC20 tokens.

Electrum

Developed as a safe and secure Bitcoin wallet, Electrum is one of the pioneer crypto wallets in the market today. It has a multisig feature that lets users split their coins between different wallets. It uses encrypted private keys and lets users switch to offline mode with a watch-only wallet. It also supports 3^rd party add-ons such as hardware wallets and a secret recovery phrase in case of loss.

Conclusion

As the crypto market continues to explode, it’s important to prioritize coin storage. One needs to go for a method that’s easy to use and convenient depending on their trading strategies. With cyberattacks on the rise, one needs to be vigilant about the security of their private key. We hope by now you know where private keys are stored and will make an informed decision.

Better yet, don’t put all your coins in one wallet. Have several batches of the private keys. You can never be too cautious about private key storage. It does make a lot of difference because that portfolio you are building right now, could be worth millions in future!