When I was 4, I had a piggy bank in the shape of a basketball hidden in my closet. I collected quarters for years and years, when eventually the bank was full. Fast forward a decade; I have no idea where this basketball quarter infused piggy bank ended up. If you think losing track of a piggy bank is sad, losing track of your crypto coins could be the worst day of your year. Rule number one, don’t lose your crypto.
While there are many benefits of a decentralized currency, the one negative is there is no “customer support” line when you make a flub. There is no number you can call or manager you can demand to speak to. At a bank, you are their customer and first priority. On the blockchain, you are just another number.
This all sounds a bit dramatic, but it is important to keep in mind. If you lose your coins, they are virtually lost and cannot be recovered. To help keep our coins safe, we use something called a wallet. When you buy your first coin from Coinbase, it is important to understand that you are using THEIR wallet. Yes, you own the coins, but it’s being stored in their wallet. Here are the 5 types of wallets you can utilize to store your coins.
Web Base Wallet
A virtual web based wallet is similar to what coinbase offers. You go to a web page, log-in, and can access your account. Something similar to this would be logging in to your online bank account. The pro, it is the fastest way to complete transactions. The con, the coins are still not in your hands. If the website gets hacked, so do you.
Most altcoins offer a desktop wallet. To use this, you must first download a software (similar to downloading iTunes or Photoshop). This is a great alternative to taking the coins into your own hands. The pro: its incredibly easy to use. The con: if you forget to back up your wallet and your computer dies, you are out of luck.
Same concept as a desktop wallet, but on your phone. Simply download the mobile app from the app store and you are good to go. I personally think the first company to make a more effective mobile wallet is going to truly open up crypto to the masses. Pro: It’s more practical and has built in QR code reader for sending payments. Con: Phones are super unsecure compared to other options.
I am just about to invest in one of these, although I should have done it a long time ago. They usually come looking like a USB stick, with some extra added tech inside. The two most reliable brands are Leger and Trezor. You can buy them off amazon or directly from their ecommerce store. It seems counter intuitive to move a digital asset onto a physical wallet, but this is one of the safest way to secure your coins. Once you transfer the coins to the hardware wallet, you can take the coins “offline” to keep them safe from hackers. The pro: it is the most secure method to keep your coins long term. The con: Not quick to transfer off/on and requires some setup/installation.
I couldn’t quite wrap my head around this concept at first but it’s truly one of the simplest ways to store your coins. It takes the same concept of the hardware USB wallet, but uses paper. You go to a website that auto generates a wallet address and code for you. Print these codes off (maybe a few copies) and stash them away somewhere (preferably a fire proof safe).
Just a personal paranoia, I don’t use these. They are very commonly used, but I still haven’t researched enough about the creators behind these paper wallet websites enough to trust it.
Alright, so that was probably the long section of this series, but it’s probably the most important. Next, we will get into the fun part. How do you trade crypto?