Have you heard about the infamous 2011 Mt. Gox event where 850,000 bitcoin were “lost” on the exchange? Not very magical at all.
Thousands of users had to learn the hard way. Exchanges are like honeypots; there are much better choices for managing Bitcoin. You always want to follow the best security practices possible when dealing with cryptocurrency.
Storing bitcoin starts with you. Owning bitcoin comes with great freedom but also comes with great responsibility. To learn how to store bitcoin the correct way, read our guide below.
Public and Private Keys
A bitcoin wallet consists of a public and private key. Whenever you wish to have someone send you bitcoin, you will provide them with the public key. The public key will be represented as a hash (a long string of numbers and letters) or a QR code.
Your bitcoin private key or seed phrase is what you need to gain or regain access to your bitcoin. This is not to be taken lightly, as anyone who has access to your private key has access to your bitcoin. Always remember the mantra, not your keys, not your crypto.
If you ever lose access to your device, you can enter your seed phrase for Bitcoin recovery.
How to Store Bitcoin
If you’re unsure of how to store bitcoin, you’ll want to start by writing down your private key and store it in a safe place such as a lockbox or safe.
Managing Bitcoin starts with a wallet. There are two types of wallets—hot and cold.
Hot Wallet
A hot wallet gets its name due to the fact that it is more vulnerable albeit more convenient. Since a hot wallet is connected to the internet, you are more susceptible to getting hacked or having your bitcoin stolen.
It is advised not to store large amounts of bitcoin or altcoins on these devices. Use them for paying for goods or services. You will come across many hot wallets you can download to your phone, desktop, or extension.
Storing bitcoin on an exchange is a big no-no. Aim to store bitcoin on a non-custodial wallet where you have full access to the private keys.
Cold Wallet
One of the best ways to store bitcoin is on an air-gapped cold wallet. A cold wallet is similar to a USB stick. It is a much safer option of how to store bitcoin since it is never connected to the internet.
Anytime you are online, you open yourself up to many financial risks. A cold wallet like a COLDCARD, Trezor, or Ledger.
The Key
You ought to have a better understanding of how to store bitcoin for the short or long term. If you ever need a refresher, you’ve got this guide at your disposal.
You never want to trust anyone in the world of cryptocurrency—only verify. Never do anything you’re not comfortable with either!
To learn more about financial investments, be sure to read our blog at your nearest convenience.
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