If you invest in and trade cryptocurrencies, then you have probably faced the problem of storing and storing them in hot or cold wallets, according to your needs as a user. Your priority should be the security of your cryptocurrency, knowing that many people around the world have already been the victims of some form of hacking or fraud. That’s why you need to commit to the task of finding a secure way to store your cryptocurrencies properly.
The information that we will cover in today’s article will be very useful for individual crypto enthusiasts, but also for those who want to use cryptocurrencies in their business. Many times people think that if they keep the money on their exchanges, it is available to them at any time and the transaction process is shorter and easier. Of course, there is truth in this, but we must also take into account the fact that in this way the money is more easily available for possible hacker attacks or other cybercrimes.
What is a crypto exchange?
It is a digital location, ie marketplace, where those who trade cryptocurrencies can sell and exchange them for other cryptocurrencies or even for common currencies.
There are rules you need to follow, and they are really similar to traditional stocks.
You need to create your own profile and define supply or demand, depending on your interest in the whole procedure.
Conversion between currencies comes with certain fees. Each transaction is authenticated. These are just some of the goal-setting shareware that you can use.
As you can see at www.ecoticias.com, even startups already accept this way of working, which means that timely information about the advantages and disadvantages of keeping cryptocurrencies in exchange wallets is crucial, especially if they are really inexperienced in this funding.
So, let’s take a look:
We will describe the advantages of using exchanges to keep your coins there, so they can be easily accessible if you need to transfer some money to another account.
1. Speed and efficiency
This way the money is easily available to you and you do not need to connect more external devices, transfer it to the account and complete the transaction. Money transfer is almost instant.
Through exchanges, you always know and are sure to which address you are sending the money, which means that the risk of error is minimized.
3. Smaller fees
The biggest problem is the high transaction fees when using wallets that are not associated with some exchange service. Simply put, the energy consumption required to complete the transaction must be charged.
As you know, every story has two sides, and one is less attractive than the other. It’s the same about this topic too since we all know how vulnerable, volatile, and unstable are all the things related to cryptocurrencies.
That’s why, at this point, we will describe a few of the disadvantages of leaving your coins on your exchange profile.
1. It can be complicated for beginners
To know how to manage centralized structures in the crypto world, you need experience or guidance from someone who has already done so. Start with smaller amounts to make sure you know how to execute transactions.
2. Less security and protection
We know blockchain is efficient and secure because the information is stored in nodes that are difficult to access. In exchanges, you only have an encrypted connection between you and the recipient, which can be pretty vulnerable and prone to hacker attacks.
3. Attractive to hackers
If you keep a large amount on your exchange account, it can easily become a target of cyberattacks. You can probably tell if something like this is happening, but sometimes these people act overnight. Legitimate exchanges are generally safe, but we all know that even the most secure structures have vulnerabilities.
Clarification of the terms mentioned in this article
If you are a beginner in all of this, you may have noticed that we use terms like a digital wallet, but also hot and cold wallets. Well, of course, we will explain all this.
A hot wallet is an online wallet, which is available through devices that are connected to the Internet – computer or phone or in some cases a tablet. The crypto exchanges are a kind of hot wallet because they are available online, you can access them from multiple devices, they offer fast and efficient transactions, but they are more vulnerable to security risks.
Sure, you can do your best to protect them, but there are too many testimonials of losing funds due to the availability of online sites.
A cold wallet is a safer option, which is slower, but the risks are smaller. Since this is an offline hardware device that is not connected to the Internet, it means that you know where your crypto savings are at all times.
They are accessible via address and public and private keys, and there is no other way to access them other than this one. These keys are printed on paper, so you have a paper wallet and except with those combinations of characters, you can not get what is in the wallet.
How to protect yourself further?
Experts would recommend that you use antivirus software and prioritize cold storage. It is best to use two-factor authentication as well so that you can verify the logins through which you will be editing.
Of course, the best advice you can get today is not to access exchanges over a public wi-fi network. You have to be really careful with this and normally, do not share login information even with people you trust.
We hope that we got all the important things covered with this article. Now, as you know all the aspects, we are sure you will be able to choose the right way to store your cryptos properly. Take care of them, and be very careful when you perform transactions, or when you talk to others about them.