Storing and securing your cryptocurrencies
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You have invested in various cryptocurrencies, but where can you store them so that they are safe?
This article is intended for cryptocurrency traders who have already completed the following steps:
1 - Opened an account on a cryptocurrency purchasing platform
2 - Deposited euros on this account
3 - Exchanged euros for Bitcoins (or another major cryptocurrency)
4 - Transferred these Bitcoins to a cryptocurrency trading platform
5 - Exchanged Bitcoins to altcoins (various cryptocurrencies) - So you have various cryptocurrencies on the cryptocurrency trading platform. What are you going to do with them? Are you going to leave them on that platform? What solutions are available to you?
The simplest solution but also the riskiest is to simply leave your cryptocurrencies on the trading platform. However, if that platform (not necessarily very well regulated) decides to close down and take all the contents of their customer’s accounts with them, you will have lost everything.
To adopt this solution, you must have full confidence in your cryptocurrency trading platform.
Important: Not all cryptocurrency trading platforms ensure pseudo dividend payments (e.g.: NEO held on a Neon wallet can generate free GAS). Make sure that your trading platform pays you these dividends, otherwise they go straight into your cryptocurrency trading platform’s pocket.
This solution is to open a multi-wallet portfolio. Each cryptocurrency has its own wallet. Some sites or applications offer to manage all your wallet cryptocurrencies in the same wallet.
More clearly, this is exactly the same as leaving your cryptocurrencies on the cryptocurrency trading platform. No other actions are possible, and from a security point of view, it's even worse. The companies behind these applications could very well be located in a tax haven, protected from any claim / conviction in case of theft.
Names of some multi-wallet portfolios: MyEtherWallet, Jaxx, Coinomi, Cryptonator, Agama, Exodus, etc.
Note: Check if your multi-wallet portfolio accumulates dividends. (See the ‘important point’ of solution 1)
This solution consists of transferring your cryptocurrencies to a special USB key (hardware wallet). The best known is the "Ledger Nano S", but you should be aware that there are others: Trezor and KeepKey.
These hardware wallets offer the advantage of physically storing your cryptocurrencies, rather than leaving them on a site or platform on the net.
The only risk for your cryptocurrencies is that you lose this key. Or someone steals it from you.
This solution is however imperfect because it does not allow the transfer of all types of cryptocurrencies. It only allows you to send major cryptocurrencies (Bitcoins, Ethers, Neo, Litecoins, etc.).
NB: these keys are still evolving and now accept a lot more new cryptocurrencies compared to when they were launched when they only accepted Bitcoins. Let us hope that one day these keys will accept all new cryptocurrencies, and even tokens resulting from an ICO.
Good to know: holding NEO on a Ledger Nano S lets you accumulate GAS. I imagine that for all future cryptocurrencies that are integrated on the key this will be the same. To be confirmed...
On cryptocurrency’s official site there is usually the option to download the wallet software for that cryptocurrency. Example: if you have NEO, you can download a NEON WALLET, transfer your NEO and accumulate GAS.
This solution is long and tedious, especially if you have dozens of cryptocurrencies in your wallet. You would need to create a wallet, including a public key and a private key (to hide) for each cryptocurrency.
This solution is also imperfect because not all cryptocurrencies offer an "official wallet". Bitcoin is a primary example. And I'm not talking about "exotic" cryptocurrencies that don't even have a website to present what's behind the crypto. (To be avoided.)
This solution simply consists of using solutions 3-4-1 (solution 2 seems the most risky in my opinion).
I say "3-4-1" because solution 3 is the one I prefer. If that is impossible, I look to see if solution 4 is possible. Solution 1 is a last resort.
In short, if you can transfer your cryptocurrency to a physical wallet, then do that.
If that's not possible, see if the cryptocurrency offers a private wallet on its official site.
If this is the case, download it and transfer the cryptocurrency in question.
And if there isn’t a private wallet? Leave the cryptocurrency on the trading platform.
For cryptocurrencies "security” is the "keyword". Taking time to secure your investments can help you reduce yourrisks and avoid regrets later..
I love to ask some cryptocurrency traders what they fear most about cryptocurrencies.
The answer is often as follows: "investing in a scam, or seeing my cryptocurrency drop to zero."
My answer would be more like this: "opening one of my private wallets and finding out that all my cryptocurrency has been stolen."
This article is intended for cryptocurrency traders who have already completed the following steps:
1 - Opened an account on a cryptocurrency purchasing platform
2 - Deposited euros on this account
3 - Exchanged euros for Bitcoins (or another major cryptocurrency)
4 - Transferred these Bitcoins to a cryptocurrency trading platform
5 - Exchanged Bitcoins to altcoins (various cryptocurrencies) - So you have various cryptocurrencies on the cryptocurrency trading platform. What are you going to do with them? Are you going to leave them on that platform? What solutions are available to you?
Solution 1 (risky): cryptocurrency exchange platforms
The simplest solution but also the riskiest is to simply leave your cryptocurrencies on the trading platform. However, if that platform (not necessarily very well regulated) decides to close down and take all the contents of their customer’s accounts with them, you will have lost everything.
To adopt this solution, you must have full confidence in your cryptocurrency trading platform.
Important: Not all cryptocurrency trading platforms ensure pseudo dividend payments (e.g.: NEO held on a Neon wallet can generate free GAS). Make sure that your trading platform pays you these dividends, otherwise they go straight into your cryptocurrency trading platform’s pocket.
Solution 2 (equally risky, if not more risky): the multi-wallet portfolio
This solution is to open a multi-wallet portfolio. Each cryptocurrency has its own wallet. Some sites or applications offer to manage all your wallet cryptocurrencies in the same wallet.
More clearly, this is exactly the same as leaving your cryptocurrencies on the cryptocurrency trading platform. No other actions are possible, and from a security point of view, it's even worse. The companies behind these applications could very well be located in a tax haven, protected from any claim / conviction in case of theft.
Names of some multi-wallet portfolios: MyEtherWallet, Jaxx, Coinomi, Cryptonator, Agama, Exodus, etc.
Note: Check if your multi-wallet portfolio accumulates dividends. (See the ‘important point’ of solution 1)
Solution3 (secure, but imperfect): physical wallets
This solution consists of transferring your cryptocurrencies to a special USB key (hardware wallet). The best known is the "Ledger Nano S", but you should be aware that there are others: Trezor and KeepKey.
These hardware wallets offer the advantage of physically storing your cryptocurrencies, rather than leaving them on a site or platform on the net.
The only risk for your cryptocurrencies is that you lose this key. Or someone steals it from you.
This solution is however imperfect because it does not allow the transfer of all types of cryptocurrencies. It only allows you to send major cryptocurrencies (Bitcoins, Ethers, Neo, Litecoins, etc.).
NB: these keys are still evolving and now accept a lot more new cryptocurrencies compared to when they were launched when they only accepted Bitcoins. Let us hope that one day these keys will accept all new cryptocurrencies, and even tokens resulting from an ICO.
Good to know: holding NEO on a Ledger Nano S lets you accumulate GAS. I imagine that for all future cryptocurrencies that are integrated on the key this will be the same. To be confirmed...
Solution 4 (secure, long, and imperfect): a private wallet for each cryptocurrency
On cryptocurrency’s official site there is usually the option to download the wallet software for that cryptocurrency. Example: if you have NEO, you can download a NEON WALLET, transfer your NEO and accumulate GAS.
This solution is long and tedious, especially if you have dozens of cryptocurrencies in your wallet. You would need to create a wallet, including a public key and a private key (to hide) for each cryptocurrency.
This solution is also imperfect because not all cryptocurrencies offer an "official wallet". Bitcoin is a primary example. And I'm not talking about "exotic" cryptocurrencies that don't even have a website to present what's behind the crypto. (To be avoided.)
Solution 5 (mine): on a case-by-case basis
This solution simply consists of using solutions 3-4-1 (solution 2 seems the most risky in my opinion).
I say "3-4-1" because solution 3 is the one I prefer. If that is impossible, I look to see if solution 4 is possible. Solution 1 is a last resort.
In short, if you can transfer your cryptocurrency to a physical wallet, then do that.
If that's not possible, see if the cryptocurrency offers a private wallet on its official site.
If this is the case, download it and transfer the cryptocurrency in question.
And if there isn’t a private wallet? Leave the cryptocurrency on the trading platform.
One last word
For cryptocurrencies "security” is the "keyword". Taking time to secure your investments can help you reduce yourrisks and avoid regrets later..
I love to ask some cryptocurrency traders what they fear most about cryptocurrencies.
The answer is often as follows: "investing in a scam, or seeing my cryptocurrency drop to zero."
My answer would be more like this: "opening one of my private wallets and finding out that all my cryptocurrency has been stolen."
