How to choose a good service for storing cryptocurrencies and not lose money

CONTENT

  • Where to securely store cryptocurrency: proven methods

  • How to choose a reliable storage for crypto coins

  • Keep your money safe and earn tokens: an offer from Simba.Storage

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the end 2020 and start 2021 years have already proved to most skeptics that bitcoin and the cryptocurrency market in general continue to grow steadily. People are deliberately returning to the crypto industry after the 2018 correction, realizing that the flagship cryptocurrency is a profitable asset for long-term investment..

Investors focused on long-term investments receive more than 50% of the return on investments in Bitcoin (as of January 2, 2021), even if they bought it at $ 19,000 in december 2017.

Long-term storage is one of the most successful strategies for interacting with BTC, therefore, investors need to take care of where to safely and securely store their digital assets. 

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There are cold and hot cryptocurrency wallets, between which you have to make a choice, but first you need to evaluate all the disadvantages and advantages of this or that wallet.

Read also: Best Bitcoin wallet – comparison, review of the most popular

Hot storage of cryptocurrencies

Hot wallets are not suitable for long-term storage of bitcoin or any other cryptocurrency. Hot wallets are online wallets that are connected to the internet. These are cryptocurrency user accounts on any online platform, for example, a cryptocurrency exchange.

Such wallets are well suited if the user often pays with cryptocurrency or is engaged in trading. In this case, all funds are always at hand and only a couple of actions are required to complete any operation.. 

The need to make quick decisions is especially relevant when trading, because the timely sale or purchase of an asset can bring tangible profits, and delay often translates into losses..

The security of hot wallets is questionable. First, attackers who have taken possession of the user’s devices will be able to quickly transfer assets to their accounts or simply spend them for their own needs. Even two-factor authentication does not always help if, for example, an attacker has a phone in his hands, which receives confirmation codes or where Google Authenticator is preinstalled. Having the victim’s computer at his disposal, it will not be difficult for an experienced fraudster to hack mail..

Secondly, hackers sometimes break into cryptocurrency platforms and withdraw user funds from there. History knows several hacks of major exchanges that resulted in theft of millions of dollars from user accounts, while it is not known how many individual investors have suffered at the hands of hackers. It is unlikely that the case of a user who lost, for example, $ 10,000 from his hot wallet, will be discussed by the entire community, especially since it will be very difficult to prove the fact that he was not involved in the transfer of specific funds.

Read also: Over 10 years hackers robbed cryptoinvestors for almost $ 7.7 billion

Given the specifics of hot wallets, this option for storing cryptocurrencies in terms of reliability and security will always be inferior to cold.

Cold storage of cryptocurrencies

Cold wallets are suitable for those who consider cryptocurrencies as a long-term investment. They are not connected to the Internet, which means they are not accessible to hackers.

Since the cryptocurrency industry is closely related to the digital environment, the main risk of theft of funds comes precisely from hackers. There may have been cases when intruders broke into someone’s house to steal bitcoins, but this is definitely a rarity, not a rule..

Cold storage includes desktop, paper and hardware wallets.

Desktop wallets are software installed on a separate computer designed exclusively for storing cryptocurrencies. The lack of access to the network will not allow such a wallet to be hacked, but there is still a risk of theft of a physical device.

A paper wallet is a sheet of paper that contains a QR code that stores private and public keys. This is the simplest, but not very reliable, way of cold storage: a sheet of paper can be easily stolen or damaged. But even with the above risks, this option is not significantly inferior in security to other cold wallets..

The most common cold wallets are hardware wallets. These are special USB flash drives that require certain software to work with, and all settings and transactions are accompanied by the need to enter a PIN code. Even if such devices are lost or stolen, a mechanism is provided to restore access to accounts using a backup phrase..

The most popular hardware wallets are Ledger Nano S and Trezor. They support storage BTC, ETH, all tokens ERC-20, ETC, LTC etc.

But hardware wallets also have certain vulnerabilities, for example, the user can lose the recovery phrase or it can be stolen / destroyed, in which case it will not be possible to recover their funds. Responsibility in this case lies entirely with the user and he should take the issue of saving his recovery phrase very seriously. Due to neglect, every day is irretrievably lost about 1500 BTC

In some countries that support initiatives to develop the cryptocurrency industry at the state level, specialized custodian vaults have appeared. For example, such a solution suggests Simba.Storage, a Swiss company that was created for the custody of bitcoins.

Diversification is considered the best asset holding strategy for both the novice and the experienced user. It is recommended to keep your funds in three or four cold wallets. For example, on several hardware wallets, preferably from different manufacturers. As a reminder, hackers recently hacked Ledger, and the personal data of 270,000 users were publicly available.

Cold storage provides an additional level of security, but their choice must also be approached responsibly. How to choose a reliable cold storage for cryptocurrency.

Cryptocurrency storage

Large investments in cryptocurrencies require a special procedure for storing assets, especially if the laws of the country in which the investor lives prohibit or restrict the circulation of cryptocurrencies. 

In any case, the storage of large savings should be entrusted to professionals. When choosing a storage, you should pay attention to its location, storage technology, specialists who organize its work and mechanisms for gaining access to funds in case of emergency..

Location

The investor needs to know where his funds will be physically placed. For example, Switzerland is famous for its positive attitude towards cryptocurrencies, in it, in the city of Zug, the Crypto Valley is located, in which all the giants of the cryptocurrency industry settled..

You can also consider other countries with a high standard of living, where all doors are open for the development of cryptocurrencies, for example, the United Arab Emirates. The crime rate in these countries is minimal, and the standard of living is high. Laws stimulate industry growth by enabling businesses to transparently and profitably deal with cryptocurrencies.

Team

Having learned everything about the storage location, you should pay attention to the team serving it. The staff should be composed of professionals from different fields, in particular, lawyers, analysts, accountants, and so on. The history of all the main persons of the company must be traced, it is desirable that among them there were successful entrepreneurs who have already established themselves in the cryptocurrency community.

The team must support the blockchain technology and be as positive as possible towards it, all the goals and mission of the company must correspond to the development and popularization of blockchain technology around the world.

It’s good if the team communicates with their community, talks about their plans, helps with storage issues and responds to requests and wishes. Conducts, for example, AMA sessions, conferences or practices other ways of interaction and interaction.

Storage process

How to choose a good service for storing cryptocurrencies and not lose money

How is the process of storing cryptocurrencies organized? As a rule, when giving bitcoins for storage, customers of popular storages receive tokens in return, which serve as an additional guarantee of the safety of funds. Tokens must be of universal use, preferably standard ERC-20, so that they can be used for all types of transactions and payments, in case of emergency.

For example, when transmitting BTC in storage Simba.Storage tokens are being issued SIMBA and each user receives stablecoins in exchange for the invested bitcoins in the ratio 1 SIMBA = 1 satoshi.

The coin is tied to bitcoin satoshi for the convenience of transfers and payments, counting on the further growth of the BTC rate. In addition, it provides additional security, because when transferring funds, bitoins do not move, only the tokens provided by them “move”. And if the tokens are sent by mistake to scammers, then the storage is obliged, if there are supporting factors, to remove the tokens from the hands of the fraudster and return them to the user. 

In addition, it has recently become fashionable to give bitcoins to your loved ones. In this case, you can donate BTC in stablecoins, and leave the coins themselves in storage. 

Best Ways to Store Crypto in 2021 with detailed Risk Analysis of every method.

In the event of the theft of tokens or the loss of data to log into the vault account, a procedure should be provided KYC (user identification) so that the client can regain access to their bitcoins.

It is also necessary to study more deeply the storage process within the company, it is better that the vault has its own storage equipment with the maximum degree of protection in several locations. One of the secure storage methods is multisignature technology and it is good when the storage uses it for security.

Commissions

Best Way to Store Your Crypto in 2020

Commissions are an important criterion for choosing a storage, so that it does not turn out that you will have to pay all your funds for storage. For example, storing funds in Bitcoin suisse, after a few years, the user can find out that all his savings have been “eaten” by the commission. This approach goes against the long-term cold storage principle..

In addition, you need to take into account the possibility of opening accounts in such vaults, they often start from $10,000 and higher. The best choice would be storage available to everyone, where the minimum invoice amount starts from $one hundred, and the commission does not exceed five% of the amount per year.

Additional functions

Usually, by keeping their funds in reliable and high-quality services, customers receive additional functions through partnerships and integrations.

For example, some provide opportunities for passive income, participation in a trust fund or inheritance of bitcoins.

Partnerships

Partnerships with other major companies in the cryptocurrency industry are a useful factor when choosing a storage. As you know, partnerships in the blockchain world sometimes play a key role in the development of a company and its popularization among users..

Openness of the repository to users

Openness of data distinguishes cryptocurrency storage from a bank. Anyone can go to the company’s website and, using blockchain technology, see how many bitcoins there are. In the bank, such information is hidden from the depositor. Each user should see that their digital gold is in place. 

Educational materials

It is necessary to pay attention to the social networks of the repository, they should also indicate the competence of the team. An excellent option would be if social networks include educational materials on cryptocurrencies and blockchain, news and useful recommendations for users..

Guided by the above information and choosing a reliable storage, you can not worry about the safety of funds and be sure of getting the maximum profit from long-term investments in cryptocurrencies.

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Disclaimer

All information contained on our website is published in good faith and objectivity, and for informational purposes only. The reader is solely responsible for any actions he takes based on the information received on our website..

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How to choose a good service for storing cryptocurrencies and not lose money
How to choose a good service for storing cryptocurrencies and not lose money
How to choose a good service for storing cryptocurrencies and not lose money

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