How and Where to Store Bitcoin?

Thousands of articles have been written about the specific capabilities and unique features of virtual currencies. Every day, we try to understand the nuances of trading digital assets and ways to profit from them. However, before putting cryptocurrency into action, it is crucial to address one of the most important and pressing questions – finding a secure place to store coins and protect them from malicious actors. We will discuss how to do this correctly, focusing on the king of virtual coins – Bitcoin.

Let's start with the fact that storing BTC can be either hot or cold. The difference between these two methods lies in internet connectivity: if coins are on a device connected to the internet, it's called hot storage. If internet access is not required, and Bitcoin storage keys are available on hardware or paper mediums, it is cold storage.

Next, we will explore several storage options for virtual coins using both hot and cold methods.

1. Hot Storage of BTC

• Cryptocurrency online wallets.

  These are repositories of digital money with a constant connection to the internet and the blockchain. A cryptocurrency wallet can be likened to a bank account used for interacting with virtual assets and doesn't require intermediaries.

  It is essential to understand that an online wallet is not an exact digital copy of the traditional wallet for fiat money. Encrypted password keys that grant access to the owner's assets are stored in a BTC wallet. These keys identify the account on the network. They can be confidently shared with other users to receive virtual assets in one's account.

  All that is required from a user to conduct an instant transaction using a Bitcoin wallet is to log into the client area and complete the operation. This is why many use these repositories for quick bill payments and shopping.

  However, there is a downside to this ease of use: Bitcoin wallets are extremely susceptible to hacking. Therefore, it's recommended to store only a small amount of digital assets needed for everyday needs.

• Cryptocurrency exchanges

  This is one of the simplest and most accessible ways to store bitcoins. When registering on a digital platform, every user automatically receives a wallet that supports all the coins available on the exchange and provides instant access to them.

  The key advantage of cryptocurrency exchanges for users worldwide today is the ability to quickly and easily regain access to their account and coins.

  However, digital platforms also have significant drawbacks, with the most crucial being low security. No existing trading platform is 100% protected from hacker attacks.

  Moreover, cryptocurrency exchanges may unexpectedly go offline due to technical issues. In such cases, customers lose access to their virtual funds and information indefinitely.

• Mobile and Desktop Applications

  They are often referred to as software wallets. These applications can be installed on a computer or smartphone and require an internet connection. All user information and transactions are downloaded to the owner's cryptocurrency wallet device.

  Such applications attract Bitcoin users with their convenient and intuitive interfaces, as well as the ability to easily and quickly perform transactions.

  A significant advantage of this type of cryptocurrency storage is the ability to track information about your digital coins anytime and anywhere. All you need is internet access, and the cryptocurrency mobile app on your phone will provide instant access to monitoring Bitcoin's exchange rate, as well as trading and tracking your crypto portfolio online.

  One significant drawback of such wallets is their vulnerability to hacker attacks and malicious actors. Additionally, wallets installed on PCs are not very convenient when you're away from home and need to use them.

2. Cold Storage of Bitcoins

• Hardware Wallet

  This is an excellent option for storing a significant amount of Bitcoin. A hardware wallet is a miniature device similar to a USB flash drive that can be connected to a computer and used for cryptocurrency transactions. The primary purpose of such a device is to simplify the process of long-term cryptocurrency storage.

  The operation of a hardware wallet is quite simple: when first set up, you need to create a PIN code, which will be used to confirm any user action in the future. Next, the owner receives a seed phrase – a code consisting of 24 random words that will be used to regain access to BTC in case the user forgets or loses their password.

  The key advantage of a hardware wallet is that it doesn't require internet access. Moreover, its compact size allows you to carry the device with you at all times or hide it in a secure place. Finally, after connecting it to a PC, you gain almost immediate access to your digital funds.

  The vulnerability of hardware wallets is significantly lower than that of hot storage devices for Bitcoins. However, hackers sometimes manage to access their security system by reading the passphrase, which attackers obtain by creating a voltage drop.

• Paper and Cards

  A paper wallet has been considered one of the most reliable ways to store Bitcoin for many years. Devices break, computers stop working, digital platforms fall victim to hacker attacks, but paper is immune to these hazards. It has no expiration date, is not afraid of network interruptions, and doesn't need Wi-Fi.

  A paper wallet is a plain sheet with printed data for sending and receiving cryptocurrency. Such storage often includes a seed phrase for recovering access. Supporters of paper wallets usually keep them in safes and retrieve them whenever they want to make a Bitcoin transaction. The most important rule here is not to take a photo of the wallet on your smartphone to prevent the data from getting online.

  For more guaranteed protection against any physical impact, experts recommend metal wallets for cryptocurrency storage enthusiasts. This could be a steel card engraved with the data and seed phrase for regaining access.