When you store traditional currency at the bank, you don’t usually worry about it disappearing because regulations and FDIC insurance protect your money.
With cryptocurrency, it’s up to you to find a safe and secure place for storing your funds because there’s no government safety net.
Here are the basic terms you need to know to understand crypto storage:
Wallet—A wallet is an app, website, or device that stores the public and private keys, or secret codes, that allow you to access the address on the blockchain and sign for transactions. You need a wallet to receive, send, or store cryptocurrencies.
Public and private keys—Keys come in pairs and can be generated from wallet software. You can use the public key to generate an address or many addresses for your wallet. Anyone can deposit coins into your public address, but you need the matching private key to access the coins. Private keys are your proof of ownership of your crypto funds.
Recovery seed—This is a special code that is generated when you set up your wallet—often a string of random words. If you ever lose the device on which you have stored your wallet (such as your computer, phone, or USB), you will be able to regenerate the wallet with these seed words.
Some exchanges offer wallets. You may also be able to download wallets created by developers through the major app stores.
When choosing a wallet:
Choosing a wallet can be confusing. Here are the main terms and types:
|Hot or cold wallet?
|Single or multi currency?
|Software or hardware or paper wallet?
|Hardware or paper: