How To Store Crypto Tokens: A Storage Guide
Like any other investments, one of the things to be concerned about, and perhaps one of the most crucial in cryptocurrency is keeping them safe. Crypto money, like Bitcoin, has been surging at an all-time high these days. And as their value increases, the risks are also becoming more serious. If you plan to purchase crypto coins or tokens or already have, you have to make sure they are secure. In this article, you will learn a few tips on how to store crypto tokens.
If you have in the crypto world for some time, you know that most traders use Coinbase and other exchange platforms like GDAX, Poloniez, and Bitfinex to buy, sell, send, receive, and exchange crypto coins, tokens, and altcoins. However, this is method is really risky as what happened a few years ago involving Mt. Gox. Ensure that your coins and tokens are safe by following the methods below.
Methods On How To Store Crypto Tokens
Typically, every crypto wallet has a public and private key. The public key is shared with others publicly to send the owner tokens in public transactions. On the other hand, the private key is intended for the user to spend their tokens. The user is the only person who should have the private key.
If you use a third party such as Coinbase and Mt. Gox, they will hold the user's private keys. If the third party is hacked, chances are the private keys of their clients can be stolen and their coins. Here the tips on how to store crypto tokens to secure them.
Keep Tokens In a Hardware Wallet
One of the ways to secure your tokens is by keeping them in a hardware wallet. This is a physical device where you can store your cryptocurrency wallet's private keys. Since this device is isolated from your computer, it becomes invulnerable to the most common attacks. Other advantages of using hardware are the following:
- The user has 100% ownership of their private keys. This means you own the coins, not any third party services.
- The private keys cannot be transferred out of the hardware wallet since they are stored with solid encryption, even when the device is stolen.
- When you are using a hardware wallet, sending and receiving coins and tokens is done through a secure user interface (UI). This is a very straightforward process in sending and receiving payments as well as viewing transaction history.
Some of the best hardware wallets are:
- Trezor - supports several currencies such as Bitcoin, Ethereum, and all ERC-20 tokens, Namecoin, Dash, and Dogecoin, to name a few. This is the ideal option, especially if you are investing in ICOs.
- Ledger Nano is one of Ledger's most significant advantages over Trezor because it supports Ripple, one currency with the highest market caps. Other currency this hardware wallet supports are Bitcoin, Ethereum Classic, Ripple, Litecoin, Zcash, Dash, Stratis, and Dogecoin.
- Keepkey - this is a popular Bitcoin storage. It also supports currencies like Ethereum, Litecoin, Dash, Namecoin, and Dogecoin.
Alternative Wallet Options
Another way on how to store crypto tokens is by using an alternative wallet. This is a great option, especially if you do not want to spend money on a hardware wallet, which is quite expensive. There are three alternatives to hardware wallets that are considered to be the safest. These are Coinbase Vault, paper wallets, and desktop wallets.
- Coinbase Vault - this is offered by Coinbase to keep your Bitcoin and Ethereum coins safe. This is an excellent option to keep small amounts of tokens secure.
- Paper-based wallet - this is a piece of paper with your private and public keys written on it. Users can use some online tools to send and receive tokens using both of their keys. Using paper wallets ensures users to have 100% ownership of their private keys. It is also protected from malware and key loggers. However, unlike a hardware wallet, a paper-based wallet does not have a nice UI. Instead, users have to use Electrum to spend their coins.
- Desktop Wallets - this type of wallet is installed on your PC or Mac. It works like a hardware wallet, although it is as safe as your computer is. The downside with this option is that it is vulnerable to software viruses and hacking. Chances are, if your computer is hacked, then your private keys could be copied, or worse, your coins could be stolen. If you are using a desktop wallet, keep your private key file very safe. You can opt to put it in a physical hard drive that is not connected to your computer. Storing them in your Dropbox or iCloud makes you vulnerable to any possible cyber attacks.
Set Up 2 Factor Authentication (2FA)
This is one of the best options to ensure your accounts are secure and don't get hacked. Set it up with every service you use, such as Google Accounts, Coinbase, crypto exchanges, iCloud, even Facebook.
Have Two Yubikeys
This requires users to physically insert a USB device into their computer to log in to many accounts and websites, like Google and Facebook. Yubikey is easier to use compared to Google Authenticator and is more secure. The reason why it is recommended to have two Yubikeys is to have a backup in case you lose the other one. Note that Yubikey does not work with most exchanges recently. The best alternative will be Google Authenticator.
Basic Common Sense
This may be the easiest among the ways but should not be taken for granted. Avoid using the same password in multiple services and choose strong passwords. Also, enable the 2FA security option based on the service you are using, and keep your paper recovery seed in a secure place if you are using a hardware wallet.
Cryptocurrency communities are growing as the number of people being interested in this venture is rapidly increasing. This is why learning how to store crypto tokens is one of the crucial things you need to know and do if you decide to invest in cryptocurrency, as there are more risks these days. Securing your tokens and coins is one thing you need to always keep in mind. Learn more on how to keep tokens secure here!
UPDATED April 5, 2021
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