Cryptocurrencies are the latest trend. Everyone is buying cryptocurrencies like Bitcoins as they are not only a form of digital currency that is created as per demand but is also a very good mode of investment.
As people have lost trust in their government and national currency due to inflation, many of them are turning to cryptocurrency mainly because the working of cryptocurrencies like Bitcoins seem more transparent and believable.
Even though there are many sources that allow you to buy Bitcoins or any other Altcoins easily, storing them is something that you should take good care of. As cryptocurrencies are a digital form of currency, it is prone to hacking and other threats. And even in case, the database where your cryptocurrency is stored is hacked, then also your cryptocurrency will be at risk of being hijacked.
If hackers or other online threats gain access to your Bitcoin wallet, then they can easily empty your entire wallet leaving you with nothing.
So today, we are here with a detailed and well-explained article on how to store Bitcoins and Altcoins safely.
- 1 How are Cryptocurrencies like Bitcoin and Altcoin Stored?
- 2 What are the types of Digital Wallet?
- 3 What is a Hot Storage Digital Wallet?
- 4 What is a Cold Storage Digital Wallet?
- 5 What are the best Hot Storage Digital Wallets?
- 6 Top 3 Cold Storage Digital Wallets
- 7 Wallets to store Cryptocurrencies: Final Thought
How are Cryptocurrencies like Bitcoin and Altcoin Stored?
As you already know, Bitcoins and any Altcoins are a form of digital currency with no physical real-world existence. Therefore, cryptocurrencies like Bitcoin and Altcoin will be stored in a digitally created wallet.
The digital wallet, unlike your physical wallet, will not have any real-world representation of the Bitcoins or Altcoins that you own but instead will save all your Bitcoins or Altcoins in a separate database called a “Digital Wallet” made specifically for that type of cryptocurrency. For example, Bitcoins will have a Bitcoin supported digital wallet and other cryptocurrencies will have digital wallets that support that form of currency.
The database that is represented by your digital wallet will have the cryptocurrencies that you own. And each database is assigned to a public key and private key that is completely unique.
The Public Key is the key that represents your digital wallet and can be shared with anyone who wish to send you cryptocurrency.
Also read: Best wallets to store Ripple
The Private Key is the key that gives you access to your digital wallet and should not be shared with anyone else. If the private key is shared, they can access your cryptocurrency digital wallet and if the public key is shared, the other person will only be able to send you cryptocurrency using the key.
One another important point to note is that as every digital wallet is represented by a unique private key, losing your private key would also restrict your access to the digital wallet featuring your cryptocurrencies and there are no alternate ways to gain your access back to the account. Meaning, losing the private key will also lose you your cryptocurrencies forever.
Having said that, let's look at the types of digital wallets where you can store your cryptocurrencies safely.
What are the types of Digital Wallet?
You know that cryptocurrencies are stored in digital wallets made specifically for each type of cryptocurrency and each and every digital wallet is represented by a public key and a private key.
Now, there are two types of Digital Wallets:
- Hot Storage.
- Cold Storage.
What is a Hot Storage Digital Wallet?
A hot storage digital wallet is a form of wallet that is directly connected to the internet and the wallet and the digital wallet account featuring your cryptocurrencies are stored online.
The common examples of hot storage digital wallets are the mobile and desktop applications that let you store your cryptocurrencies. Hot storage digital wallets can also be compared with the e-wallets applications that you carry around.
The main advantage of having a hot storage digital wallet is that you can access it from anywhere. As the data is stored in an online database, you can easily access the wallet from anywhere and on any device with an internet connection.
Also Read: Best Wallets to Hold Ethereum
However, online storage of your cryptocurrencies also mean that they are the most prone to hacking attempts as the public and private key are also stored online.
What is a Cold Storage Digital Wallet?
When all the data of your cryptocurrency is downloaded and stored offline in a digital wallet device with no access to the internet, then such digital wallets are called cold storage digital wallets. It is important to note that not the actual cryptocurrency, but crucial data like public and private key are stored in a cold storage wallet. Your cryptocurrency will still remain stored in an online database.
Cold Storage wallets mean that you will need to purchase a real digital wallet device designed to host your specific cryptocurrency, this will require an investment and is perfect for someone who is interested in long-term holding of the cryptocurrency.
As the data is stored offline in a physical device, you will need to carry the device around to make payments in cryptocurrency and also cold storage wallets are safe from any online hacking attempts as the device is not connected to the internet.
However, if you damage or lose your cold storage wallet, you will again lose the access to your cryptocurrency wallet and all the currency stored in it.
What are the best Hot Storage Digital Wallets?
Below are some of the really popular hot storage digital wallets to store your cryptocurrencies.
GreenAddress.it is an online Bitcoin wallet and is one of the first digital wallet that offers high-end security features for its users. Some of the security features of the GreenAddres.it wallet include:
- Support for hardware wallet.
- Dynamic fee.
- Pin-locked wallet.
The main feature of GreenAddress.it is Multisig which stands for Multisignature. The multisig feature requires a manual confirmation from the account holder to proceed and complete any transaction.
The GreenAddress platform has its support for Linux, Windows, Mac, Android, iOS and even has a web-based application.
Bitcoin Knots is a Bitcoin client that builds the network backbone. This platform has a high level of stability, privacy, and security. Bitcoin Knots provide you a complete control over your wallet featuring Bitcoins and no third-party sources can gain access to your funds.
Also, Bitcoin Knots wallet is a completely full node which relays and validates all the transactions on the Bitcoin network.
The Bitcoin Knots wallet is supported on all major operating systems like Windows, Mac and Linux.
ArcBit is a simple to use wallet that offers its users with complete and unrestricted control over their wallet and Bitcoins. ArcBit also features a cold storage feature which is optional and this feature lets you to manually authorize each payment offline.
ArcBit is supported on Windows, Linux, Mac, iOS and Android.
BitGo is a Bitcoin wallet that gives security maximum priority possible. This wallet features the multi-sig feature thus offering additional protection to your wallet. BitGo is also very easy to use and also offer additional protection on multiple user access and spending limits.
BitGo platform can be accessed on Windows, Mac, Linux and even via their web application.
mSIGNA is also an advanced Bitcoin wallet with features that are easy to use. This wallet features good transaction speed, scalability that is enterprise-level and also features support for BIP32, multi-sig transactions, cold storage, multiple device syncing and paper and electronic backup options.
mSIGNA is available on Mac, Linux, and Windows.
Armory is one of the advanced client for Bitcoin and has unique features targeted towards power Bitcoin users. This wallet comes with several encryption and backup features along with support for secure offline cold storage.
Armory can be accessed on any device running Linux, Mac, and Windows.
Bither is a multi platform Bitcoin wallet that is both simple and at the same time secure to use. There are special Hot and Cold storage modes to offer flexible protection for your wallet. This wallet also features XRANDOM which generates a unique number for users by accessing various entropy sources. Another feature of Bither is HDM where Bither users can avail multi-sig and HD protection.
Bither is available on Linux, Mac, Windows, iOS and Android.
The main focus of the Electrum Bitcoin wallet is to minimize resource use and provide maximum speed possible. This wallet is secure as well and makes use of remotely stated servers that can handle the tedious tasks of Bitcoin transactions.
Electrum is supported on Windows, Mac, Linux, and Android.
For Altcoins like Ethereum and any other cryptocurrency based on the ERC20 technology, the MyEtherWallet.com website is the best online wallet for storing cryptocurrency.
MyEtherWallet.com is an open-source and free platform that helps customers to easily create and maintain a secure online digital wallet to store and transact using their Ethereum currencies or any other ERC20 powered cryptocurrency.
Like the GreenAddress.it website for Bitcoins mentioned above, MyEtherWallet.com also supports hardware wallets thus letting you to easily transfer your online cryptocurrency information to a hardware wallet anytime you want.
MyEtherWallet is also available as a Chrome extension for people using the Chrome web browser and is also available as an Android application as well so that you are not restricted to using the web interface whenever you wish to access the MyEtherWallet website or its features.
For any other cryptocurrency other than Bitcoins or ERC20 powered currencies, there will be a specific digital wallet that supports the currency. So do check out the wallets that support the currency that you own.
It is a free online HD wallet for Bitcoin and can be used to make payments globally. Coin.Space offers a secure and easy platform to transact Bitcoins.
Coin.Space is available for Android, iOS, Windows Phone and also features a web app.
Mycelium is an Android app that provides complete access to your Bitcoin wallet without compromising security or features. Mycelium does not entertain any third-party access and prevents any sort of spying on your Bitcoin transactions.
Airbitz Bitcoin Wallet:
Airbitz is a secure mobile Bitcoin wallet that offers high priority to privacy. This wallet is auto-encryptoted and also backed up thus allowing to function even in case the Airbitz based servers go offline.
Airbitz app is available on Android and iOS.
Simple Bitcoin Wallet:
Another Android-based Bitcoin wallet is the Simple Bitcoin wallet that offers a high level of security, privacy, and simplicity. One key feature of this wallet is the dynamic fee suggestion feature that provides you with fee suggestion on transactions so that you only pay what you have to.
Bitcoin Wallet is a reliable, secure, fast and easy to use app that no centralized service for Bitcoin operations. For people not technically into Bitcoin, the Bitcoin Wallet app is the best choice.
Bitcoin Wallet is available for Android and Blackberry devices.
Simplicity is the key principle behind Breadwallet. It is a standalone Bitcoin client and has no server, therefore, possessing no hacking threats. This application also protects your wallet from any malware or other security loop holes.
Breadwallet is available on iOS and Android operating systems.
GreenBits is an Android app that is easy to use and fast Bitcoin wallet with great security and hardware wallet support that is optional. This wallet also features multi-sig and spending limiter.
Coinapult is a web-only application that mainly targets the new Bitcoin users. Coinapult lets you send Bitcoins via SMS or Email and helps protect your wallet from Bitcoin price swifts. You can lock your existing Bitcoins against Euro, Gold or any other stable investments.
Top 3 Cold Storage Digital Wallets
Below are some of the very popular cold storage wallets to store cryptocurrencies.
A paper wallet is an offline cold storage wallet and as the name suggests, the data is printed in a sheet of paper. However, as we have already mentioned above, cold wallets does not store your actual cryptocurrency but the public and private key to the online database.
In paper wallets, both the public and private key are printed to a paper in the form of a QR code and you can then manually store them in a safe place of your choice. In order to access the cryptocurrency wallet or to let others make cryptocurrency payments to you, you can make use of the QR codes representing the private and public keys respectively.
Websites like Bitcoinpaperwallet.com and OfflineAddress.com can help you create paper wallets.
Trezor is an offline hardware cold wallet launched back in 2013. This wallet can be used to store Bitcoins and is the first hardware cold storage wallet for Bitcoins.
The design of Trezor resembles that of a key and thus is very small in size and can be carried around anywhere. The device features a screen to display important information and can be connected via an USB port to your computer to move your keys and other transaction data. Trezor can protect itself from any hacking attempts even when connected to a computer infected with malware.
Trezor is priced at $99 for a single piece and $276 for a pack of three.
Ledger Nano S:
Another really popular cold storage wallet is the Ledger Nano S and is also the cheapest cold storage wallet out there with a display. Ledger has previously released two other hardware wallets and the Nano S is the only one with a display.
Similar to Trezor, the Ledger Nano S can also be connected easily to any PC via USB and can also protect itself from any malware infections that may be present in the PC.
The Ledger Nano S cold storage wallet is priced at $65.
Indians can buy it from Etherbit - Click here
KeepKey is cold storage hardware for Bitcoin storage. Once you keep your Bitcoin details into the KeepKey device, every transaction will then require a two-step physical confirmation. It also features a software client that can be installed on your computer and can work in hand with the hardware wallet to manage your transactions, key generations and key storage.
KeepKey also features several other backup, security and privacy features thus making it one of the best cold storage hardware wallet for Bitcoin.
The KeepKey hardware wallet is priced at $129.
Digital Bitbox is a hardware cold storage wallet that is minimal in design and offers some high standard security and privacy feature. The key feature of Digital Bitbox is that all the data can be backed up from the hardware itself at anytime by inserting a MicroSD card directly into the hardware wallet. You can also recover data using the same procedure.
Other features include an optional Tails OS and TOR compatibility.
Digital Bitbox hardware cold storage wallet is priced at $64 and comes with a MicroSD card for backup and restore.
Wallets to store Cryptocurrencies: Final Thought
The article above was a detailed explanation on how cryptocurrencies are stored in general and what are the different type of digital wallets that are available.
Hope you found the above article informative and in case you have any doubts on cryptocurrencies or any wallets listed in this article, feel free to leave a comment and ask your questions.