Investing in the crypto market is a high risk itself. The world of digital assets can make a difference in our economy and society or it can be just another speculative bubble. I believe cryptocurrencies are an emergent consequence of our social evolution. And if you agree with me and you decide to invest in this area, you probably want to keep your investment in a secure wallet.
Cold wallets (paper or hardware) seem to be the best option from the market. Despite this fact, they are a little unhandy to use. More than that, a hardware wallet (like Nano Ledger or Trezor) is around $100.
I have discovered 2 free options to keep digital assets secure, both related to hot wallets:
- install a hot wallet on some old device that you can keep offline until next transactions;
- install a hot wallet, make all transactions you need, then remove it, wipe and reset your device. The next time you need access to your funds, just recover the wallet according to the secret phrase.
Let me share with you some details and how I found and tested these solutions.
Disclaimer. This is not a crypto financial recommendation. Make your own analysis before choosing the best way to store your digital assets.
1// An offline hot wallet
I believe this is not rocket science for anyone. Probably, every cryptocurrency owner has thought about this option at a certain moment of time. And I believe many people from the community do it.
What's the deal with it?
If you have an old device at home at you no longer use, you can convert it into an offline crypto gadget. If you have a smartphone, you can choose a suitable mobile crypto wallet. Maybe you have just changed your laptop, so you can use that.
Of course, a hardware device (Nano Ledger, Keepkey or Trezor) is around $100 only. The recommendation is to have 2 devices, one for storing and the other blank in order to restore your wallet in case of losing or breaking the first one. So basically, that is a $200 total investment. Instead of that, you can use some old smartphone, tablet or laptop.
My preferences. You can check this article to see 7 mobile crypto wallets that I like. As desktop multi-currency wallets, I like Exodus and Jaxx.
What to do?
Well, with a few exceptions, these are actually the same steps as with a hardware crypto wallet.
- Wipe the device;
- Install and configure a crypto hot wallet (desktop or mobile). Don't forget to write down the recovery key;
- Send the funds to your new wallet;
- Disconnect the device from the internet, close it and keep it somewhere safe.
- Make a copy of your recovery key and keep that safe, too.
Optional step. Before sending the funds (step 3), check if you can recover your wallet from your recovery phrase. Remove the wallet, reinstall it and restore it according to the secret set of words. This way you avoid any typos while writing down your recovery phrase. Remember that this set of words (the recovery phrase) is the only way to get your funds back in case your device is broken/stolen/gets in fire/whatever it makes it nonfunctional.
2 rules
I believe there are some rules that you should take into consideration when doing so. These rules also apply for a hardware crypto wallet.
First, you have to keep your device and your recovery key safe. I highly encourage you to have a back-up for the recovery key, in a different place than your house.
Second, have some minimum security rules, like don't connect to public wifi networks when doing some transactions, activate opening pins/passwords, don't show anyone your wallet and keep the recovery key secret.
One example
A few months ago, I was talking to someone about crypto investments and how we see the future of digital assets. He told me about his big investments in this area (millions of dollars). When I asked about security and how he keeps all those money safe, the answer was simple: a desktop wallet on a laptop kept in a bank safe-deposit box. Well, why not?
2// A non-existent wallet
This is the second solution that I have been thinking for the past weeks. I mean, I don't find any problem with it. Still, I am not sure if it is ok.
What's the deal with it?
The idea was inspired by the example above. Actually, there was a question that came to my mind: why do you need to keep the laptop in the bank safe-box deposit, instead of keeping the secret key (recovery phrase) only? If you plan not to use your funds for a longer period of time, why don't you follow these steps:
- wipe a device (phone, tablet, laptop);
- install and configure a hot wallet. Again, write down the recovery key;
- remove, reinstall and restore your wallet using your recovery key. This is not optional anymore;
- set your funds and make sure everything is ok;
- remove the wallet, wipe the device so no private key/any data crypto related remains there.
Shall you need to have access to your funds, all you have to do is to restore your wallet by using the recovery phrase (step 3).
Possible problems
The only 2 problems (that I can see) regarding this option are keeping the recovery phrase safe (this is crucial) and the wiping process. I am not precisely sure if a reset removes all data.
Technically, there can be an entire talk around this wiping method. Data can probably be recovered. But I believe it is easier to steal a recovery phrase than reverse engineer a device and get the data.
On the other hand, if you choose to store your fund on a paper wallet or a hardware wallet, you still have to take care of your private key/recovery phrase and device if the case.
The inspiration
As mentioned in this article, I have lost the password for a hot wallet. I have explained there all I did in order to recover my money. But the idea is simple: around 1 year I didn't have access to my funds. I have finally recovered the wallet using the recovery phrase and everything was perfectly fine.
If you think about how blockchain works, then I can see no problem in not actually having something besides a set of 12-24 words written on a piece of paper. The only fear I see is related to the way we manage our emotions and the need for something tangible.
Why offline?
I believe the answer to this question is quite obvious. Any gadget that is connected to the internet is susceptible to hacker's attacks. It is not easy to hack a device, but it is far from impossible.
So, keeping the funds offline is storing your money far from the reach of digital thieves. When you want to make a transaction, you have to obviously connect to the internet. So just take into consideration some minimum security rules when going online.
The perfect solution
Well, there is no perfect solution, there is the best solution for you. And it is you that has to choose it. I just give you the information I have and the things that I have discovered. But there is no one in this world to tell you how to make your investments and how to keep them safe.
I highly encourage you to analyze the data from this article, search for the information you don't trust or need to deepen and take the most comfortable solution for you.
Final Thoughts
The world of cryptocurrencies is new and challenging from many points of view. What digital assets to trust? What ICO to buy? How to best invest my money in this area? What exchange to choose? How to store my funds in the safest way? And many more. All these are valid questions that every crypto investor asks.
And, overall, there is the biggest question: are we facing a crypto economical bubble?
Regarding all this, it is your opinion the only one that matters. On this website and all the others that are active in the crypto area, you will find information. In the end, it is your financial decision.