Too many people completely lose focus on the most important thing when they are investing their money in cryptocurrencies. Yes, they might seem like the digital version of paper currency, but digital currencies have several differentiating factors that demand that you consider additional factors before investing in them. One of the biggest challenges that you will face when you go for crypto is the storage of these coins. You can’t just take this matter lightly and think you will never have to deal with it ever.
There are many inherent problems with the way most people decide to store their digital assets. What they don’t realize is that they can lose all and everything they own in a matter of seconds if something wrong happens. So, it is recommended that you take the storage and safety of your digital investments seriously.
Hot Wallets Aren’t Very Safe
There is some problem with hot wallets. If you don’t know already, hot wallets require you to store your money in a web-based version of the wallet. Even if it is not a web-based version, you have to store your digital coins in an application that is connected to the internet always. This means your money is there on the internet just protected by your private key. However, with a few sophisticated moves, cybercriminals can take away the money you have. If you are wondering what the common hot wallets are then you should look at online crypto exchanges.
When you buy digital coins from an online exchange, your purchased amount gets saved somewhere. Guess where it gets saved? Well, it is saved on the wallet that is maintained by the exchange. In other words, your money is available online so you can access it anytime you want. Since you can access it whenever you want, cybercriminals can do the same.
Cold Wallets Are Tricky to Handle
Some people think that it is easy for them to just write down their private key on a piece of paper and save it somewhere. This key acts as the piece of information that gives anyone access to your wallet. Once they have it, they can see, use, spend, and buy with the crypto coins that you have in your wallet. Yes, it seems safer in the sense that your key is not connected to the internet. However, how hard do you think it is to lose a piece of paper? Isn’t that something we usually lose when we need it? Think about all the lottery players who lost their opportunity to win big because they had forgotten where they put the ticket.
In other words, unless you have some foolproof plan, you should not consider offline wallets either. Make sure you understand the pros and cons of every method before trying one. What you own today will be multiplied tomorrow, which means you will be losing much more than you own right now if your crypto coins get stolen.
People Confuse the Keys to This Day
Another problem that surrounds a lot of new traders and investors in digital currencies is that they keep mixing and confusing the crypto keys. Some think they are both supposed to be a secret whereas some have no clue why they should hide them. This confusion has led to many people disclosing their private keys to people who were simply asking them for those keys in an obnoxious attempt to hack them. The reality is, the private key of your wallet should not be known to anyone in the world other than you, just like your personal banking password.
So, you should know that this is an ignored side of online crypto investment. People pay attention to everything other than how they will store the digital currencies they earn on the way. If you are not careful about this step, you could lose every penny that you have invested in this venture.