How many times have you lost a USB drive with nothing more than documents on it before? That alone is inconvenient. But that doesn’t mean there aren’t still risks.įor one, hardware wallets can be easily lost or misplaced. Because they’re offline, hardware wallets are the most difficult type of wallet to hack. Sometimes paper wallets - wherein you print information about your public and private keys onto a sheet of paper - are even used as cold storage.Ĭrypto enthusiasts often see cold storage as the gold standard for protecting your digital assets. Many popular cold wallet devices look similar to a USB drive. These are sometimes called cold wallets or cold storage, and they store your keys completely offline on a device not connected to the Internet.
Those more involved in actively transacting with crypto, on the other hand, may want the convenience and speed that an online hot wallet can offer. Long-term Bitcoin investors, for example, who plan to hold onto it for a period of time as a store of value may want the security of an offline cold storage wallet. Using these keys, you can send or receive cryptocurrency while keeping your private key encrypted.ĭifferent crypto storage options can serve different purposes, depending on what you plan to do with your crypto. “You would not want to give that to me because that would give me access to your account,” DeCicco says.Īs a purely digital currency, crypto isn’t directly held within your wallet instead, the wallet stores information about your public and private keys, which amount to your ownership stake of the crypto.
These people usually view your public keys as a wallet address - a hashed, or more compressed, version of that public key.īut a private key is like your bank account password or the PIN to your debit card. You can share it with other people or institutions, so they can send money to you or take money from your account when you authorize it. “Really all you need to transact in crypto is two things: your wallet address, which is also called your public key, and then your private key,” says Nicole DeCicco, founder of CryptoConsultz, a consulting practice for individuals and organizations learning about crypto and blockchain technology.Ī public key is like your bank account number. Like a regular wallet stores physical currency when you’re not using it, a cryptocurrency wallet is a place to store your digital currency.
Here’s what you need to know about cryptocurrency wallets, and how to decide which storage option is right for you: What is a Cryptocurrency Wallet?
But you can also move them off the platform to a personal crypto wallet, which may be software connected to the Internet (a hot wallet) or a completely offline device (cold storage). When you buy digital currency on a trading platform, or exchange, you may have the option to leave the “keys” to your coins within the account - that’s one form of storage. Just like you need a wallet to protect your cash and credit cards, you should also know where you’re going to store your crypto. For more information, see How We Make Money. Some links on this page - clearly marked - may take you to a partner website and may result in us earning a referral commission. We want to help you make more informed decisions.