Image source: https://cryptohustle.com/7-reasons-why-bitcoin-is-better-than-banking
Since coming to Steemit, I have been really blown away by the support for cryptocurrencies here! Of course, it only makes sense considering the platform itself. I mean, if you didn't have any faith in digital assets, you wouldn't be here trying to acquire them. That's why the thing that REALLY surprises me is the amount of people who simply do not know how to keep their digital assets safe. Now, I am not the first person to attempt to tackle this subject, and I know I will not be the last, but I will endeavor to explain to all of my listeners exactly how you keep your digital currencies safe. For the purposes of this article, I will be using Bitcoin. However, with the exception of the specific products that I will mention, the process and key points are EXACTLY the same, whether it be for Ethereum, Monero, REP, DGB, Dogecoin or your favorite flavor of the month.
So, when it comes to the fiat wallet that you put in your back pocket or purse or wherever you keep it, you will notice that they come in many different types and sizes. Some are leather pouches, some are metal clips. Some people make their own, and some people buy one from someone else. This is the same when it comes to wallets for digital currencies. Because the aim of this article is to help people keep their assets safe and try to help build confidence in digital currencies themselves in the hope that more and more people will adopt the use of them, I will list them in order from safest to most convenient. This is typically how it works, but not always. The more convenient the wallet is, the less safe it is.
The very safest, as in they are %100 secure. There is no way, short of someone being on your computer, like physically on it, that someone could take your coin from you. Even if they WERE actually sitting ON your computer, they would have to know your private keys, which you either store elsewhere or keep in your head. And if they didn't? There is absolutely no possible way that anyone could possibly take your assets. These wallets are called cold wallets. You can keep them on a USB drive or even on paper! The advantage to the cold wallet is that if you do not have the USB plugged into your computer, and if your computer is not on the internet, there is literally NO WAY that anyone could steal your coins. This is even BETTER than a BANK ACCOUNT which actually CAN be hacked. I'm not saying that is it EASY to hack a bank, but it certainly has been done in the past. Banks can even be robbed. However, a cold wallet simply cannot be. The only way it can is if someone then stole that USB drive, but of course, there is no way to avoid this.
There are also other forms of hardware wallets which are made by companies like TREZOR. They are fantastically safe ways to store your coin and even give you access to your private keys in case of forks. This means that you would actually get your BCH AND your BTC had you had some in a TREZOR wallet when the Fork was implemented.
Source: https://en.bitcoin.it/wiki/Cold_storage
The next most secure is to make use of a wallet that is stored on your computer, but is connected to the internet. These are still VERY secure in that even if someone was able to steal the wallet from your computer, it is still well encrypted. This means that someone would still have to know your private keys to gain access to the funds. So, my suggestion is to store your private keys elsewhere in case you ever need to recover the wallet remotely. The best example of this is the Bitcoin Core wallet . This is the OFFICIAL Bitcoin Wallet. IT is great because of it's amazing security. It actually allows you to become a PART of the Bitcoin network. Making decisions and helping the network confirm transactions. In this way you are actually HELPING the Bitcoin network to function while keeping your coins VERY safe. I would equal this amount of security to having a bank account with any Federally Insured bank. However, these wallets have an ENORMOUS draw back in that they start out as 100+GB files and only grow in size as transactions continue to happen. They can take upwards of a week to download the first time and any funds you place in there can not be used until the wallet is fully installed. True, it's only a one time download, but you still have to store it!
Source: https://bitcoin.org/en/download
Next would be Lite Wallets. These are wallets that because of a third party help, do not need to be installed fully. In other words, you can install these wallets in a matter of seconds or minutes and they are immediately functional. They are lightweight. They are very convenient, you can install them on mobile phones, or tablets. Some of them even allow for multiple currencies. I have one that could possibly store ALL of my cryptocurrencies at one time. These are probably the second least safe way to store your coins (and this is arguable, they may be the least of all.) The reason being is that you are trusting your coins to a third party. Some of them even keep your private keys so that in the case of Forks, you will only be left with your original currency and the company would keep the other. In the above example of the BTC/BCH Fork, anyone who had 1 BTC would then have 1 BTC and 1 BCH, but not in this case. The company would take the BCH and you would only keep your BTC. Further, there is nothing to say the company could not just declare bankruptcy and disappear.
Still, these wallets are not completely without use. I use them to mine into, so that I can quickly and cheaply transfer the coin where I want it to sit, in my cold wallet, or on to the next topic...
Source: https://www.weusecoins.com/en/find-the-best-bitcoin-wallet/#online
The most insecure as far as I am concerned, yet the most convenient AND the best way to make your coins work for you (after all, every satoshi should have a job, am I right?), is the exchange. Exchanges like Poloniex.com and bitfinex.com are GREAT ways to store your currencies. They can store almost ANY type and you can buy/sell/trade and even lend and borrow coin at market rates, like a mini stock market. However, be aware that exchanged like Mt. Gox and Bitfinex have indeed been hacked to GREAT detriment of the community. Coins lost in this way are rarely recovered. My suggestion is to next store coin that isn't working at that moment, and never put a coin to work that you cannot afford to lose.
Don't get me wrong, however, I use exchanges ALL the time. It's just important to understand why they are dangerous. Any time you are giving access to your coins to anyone at all, you are creating a huge risk for yourself. No one cares about your coins as much as you do and you will be smart to remember that.
But to those folks that claim that cryptocurrencies are unsafe and feel that they are scary investments. I invite you to read up on cold wallets, read up on exchanges and you will find that digital assets are as dangerous as carrying cash on you. If you know what you are doing you can hold them even more safely than your bank could. You can hold them and hide them in safes, and under houses and even bury them in your yard. Don't be so sure that a bank account is safer. They can be hacked, they can be stolen from and in times of great distress a bank run can leave you penniless when it matters the most.
Cryptocurrencies aren't where they need to be as far as using them in a crisis to feed your family or something, but someday they will be. And when it happens, banks will run. I can almost garauntee it. So be smart, diversify. Hide your money in many places and PLEASE make sure you understand the limitations of each type of storage. If you do so you will begin to realize jsut how safe digital assets are! They are FAR more safe than fiat or banks or really anything that has come before.
Source: https://cryptohustle.com/7-reasons-why-bitcoin-is-better-than-banking!
https://www.weusecoins.com/en/find-the-best-bitcoin-wallet/
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