David and I share with all of you a topic that we discuss frequently: how to keep your crypto portfolio safe by diversifying your storage solutions.
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Getting crypto currency is just the first step while storing it safely requires entirely different skills and knowledge. In this episode, David and i go over different options available today to protect your funds, choose the right combination of wallets, and minimize the risk of the most common hazards of crypto security.
Let’s start with the first common question:
Should you keep your crypto at your crypto exchange? The answer is no. Unless you’re planning on using it for frequent trading, after you buy any type of crypto assets, you should move them out of the exchange and into your crypto wallet. There are many reasons to do this, but primarily, as long as you keep your crypto with the exchange, you don’t actually OWN your crypto. The exchange has the keys, not you. You want to change that right away.
So, What Is A Crypto Wallet?
In a nutshell, you can think of a crypto wallet as a software program designed to store your public and private keys, send and receive digital currencies, monitor their balance, and interact with various blockchains. The moment you decide to purchase digital currencies, you will need to have a crypto wallet to manage your crypto assets and keep them secure.
There are two types of crypto wallets depending on how you access them, and they are typically referred to as Hot Wallet and Cold Wallet.
A Hot Wallet is the type of wallet that is connected to the internet (either via phone app or desktop app) and it can be accessed anytime. All online cloud wallets, most mobile apps and software wallets as well as crypto exchanges are considered hot wallets. They are also free in most cases.
A Cold Wallet, also referred to as a Hardware wallet, is NOT connected to the internet and it allows you to store your digital assets offline. The most commonly used cold wallets utilize USB and offline similar data storage devices. These wallets are not free and the price ranges from around $50 to upwards of $200 as of this writing.
If you’re a serious crypto investor, you would probably want to use a combination of both cold and hot wallets. Hot wallets are handy for frequent trading, while cold wallets are better for long-term holding of crypto assets and stronger security.
We also discuss other crypto diversification strategies such as DeFi, most commonly used tokens and NFTs.
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