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  1. Home
  2. Akadeemia
  3. 1.05 Storing crypto: where and how?
  • 1.01 This is why you can no longer ignore cryptocurrencies
  • 1.02 What are cryptocurrencies?
  • 1.03 Cryptocurrencies vs fiat money: similarities and differences
  • 1.04 Cryptocurrency coins vs tokens: what is the difference?
  • 1.05 Storing crypto: where and how?
  • 1.06 Understanding crypto wallet terms
  • 1.07 Best practices to keep your crypto safe
  • 1.08 What is Bitcoin?
  • 1.09 How Bitcoin price is defined
  • 1.10 Sending and receiving Bitcoin
  • 1.11 What is Bitcoin halving?
  • 1.12 Understanding Bitcoin nodes
  • 1.13 Can Bitcoin network be hacked?
  • 1.14 The fundamentals of altcoins
  • 1.15 The basics of blockchain technology
  • 1.16 Blockchain use cases
  • 1.17 What is mining in blockchain?
  • 1.18 How do mining pools work?
  • 1.19 Bitcoin mining difficulty & pre-mined coins
  • 1.20 What is Ethereum and how does it work?
Eelmine materjal

1.05 Storing crypto: where and how?

In this lesson, we explain how and where to store cryptocurrencies.

article
zondacrypto Team
13 jaanuar 2022
11 august 2022



From Starbucks to Domino's - many well-known outlets have started to accept payments in crypto, mainly Bitcoin. With the rising predominance of digital currencies, it is no longer a novelty that people are stashing away Bitcoin or other digital assets.  

As we discussed in our previous lesson, you can neither touch cryptocurrencies nor hand them over to the next person. They do not exist in physical form. So, you cannot tuck them in your purse or store them in bank accounts. Then, how do you securely store your digital assets? If not banks or purses, where can you keep them? 

In this lesson, we explain how and where to store cryptocurrencies.

Contents

  • What is a wallet?
  • Types of crypto wallets
  • How to store cryptocurrencies on different wallets?

What is a wallet?

A cryptocurrency wallet is equivalent to a bank account. It allows you to store, send, and receive digital currencies. It is like your personal interface to the crypto network similar to how your bank account is an interface to the regular monetary system. 

A cryptocurrency wallet is basically software that stores your public and private keys and interacts with multiple blockchain networks. It allows crypto transactions and monitors the user’s balance. 

Let us take an example. When a person sends you one Bitcoin, they are essentially signing off their ownership of that BTC to your wallet address. There is no transfer of coin but the transaction record is stored on the blockchain and your wallet recognizes the increase in balance. 

Digital wallets do not store any currency like traditional wallets. They store the keys to access your crypto holdings on various blockchain networks.  

You don’t need separate wallets for different digital currencies. A single crypto wallet holds multiple keys and allows you to hold different cryptocurrencies. However, it is advisable to have several wallets for maximum security.

Types of crypto wallets

Based on their operation and location of storage, crypto wallets are classified into different categories. 

Hot wallets and cold wallets

To simply put, a hot wallet is connected to the internet and readily available for transactions. Whereas, a cold wallet is not connected to the internet and stores digital assets offline. Cold wallets are not intended for regular transactions. They are mostly used for storage purposes.  

Crypto wallets can be further classified into the following four segments,

  • Software wallets
  • Web wallets 
  • Hardware wallets
  • Paper wallets

Software wallets are generally hot wallets as they require the internet to operate. Hardware wallets and paper wallets are cold wallets. 


 

How to store cryptocurrencies on different wallets?

Software wallets

Software wallets can be downloaded and installed on your mobile device, PC, or laptop. There are two types of software wallets - desktop wallets, mobile wallets. 

When a software wallet is installed on a particular device, you can access it only on that device. 

You have complete control over your wallet and can access it instantly. This software file is encrypted. To access it, you need to have a customized passphrase. Software wallets are user-friendly and offer high security. But if the device is infected with a virus or hacked, your wallet will be compromised.   

Web wallets or exchange wallets

Web wallets or exchange wallets fit into the umbrella of hot wallets as they require the internet and are readily available to transfer. 

In addition to buying and selling, crypto exchanges also enable you to store crypto coins. When you purchase a cryptocurrency coin on zondacrypto, it is automatically stored in your exchange-hosted wallet. 

This type of wallet is web-based. You need to create an account and then sign in to access the exchange wallet. They are simple to use and beginner-friendly. 

Hardware wallets

Hardware wallets are physical electronic devices. They look like a USB thumb drive and they store your private keys in them. The devices use a random number generator (RNG) to generate public and private keys. 

Hardware wallets store cryptocurrencies offline and they are highly secured. However, the transactions are conducted online. 

When you want to send or receive cryptocurrencies using a hardware wallet, you need to plug in the device to any computer with an internet connection. You need to enter a pin to make the transaction and confirm. 

Hardware wallets are less user-friendly compared to software wallets and are not immediately accessible to make transactions. However, as they are not connected to the internet, they are also less likely to be hacked. 

Paper wallets

A paper wallet is a printout of your public and private keys. It is like a physical copy containing your keys. Paper wallet software securely generates a pair of keys and then prints them on paper. 

Paper wallets are easy to use but you also need to have a software wallet to access them. In order to perform a transaction, you need to transfer your digital currencies to a software or web wallet. If you keep your paper wallet safe, your cryptocurrencies are highly secured. 

Crypto exchanges and software wallets are beginner-friendly. If you are a beginner, it might be difficult to use a hardware wallet. Each type of wallet has its own advantages and risks. We advise you to choose a wallet based on your requirements. 

In the next lesson, we learn the key aspects of storing digital currencies - wallet address, public address, and private address.

DISCLAIMER

This material does not constitute investment advice, nor is it an offer or solicitation to purchase any cryptocurrency assets.

This material is for general informational and educational purposes only and, to that extent, makes no warranty as to, nor should it be construed as such, regarding the reliability, accuracy, completeness or correctness of the materials or opinions contained herein.

Certain statements in this educational material may relate to future expectations that are based on our current views and assumptions and involve uncertainties that could cause actual results, performance or events to differ from those statements.

BB Trade Estonia OU and its representatives and those working directly or indirectly with BB Trade Estonia OU do not accept any liability arising from this article.

Please note that investing in cryptocurrency assets carries risks in addition to the opportunities described above.

Järgmine materjal

1.06 Understanding crypto wallet terms

1.06 Understanding crypto wallet terms
Eelmine materjal
4 / 5 / 23
Safety

4. 08 Phishing: types and examples

Phishing is a type of fraud that involves impersonating another person or institution in order to extract data ...

Loe lähemalt
4. 08 Phishing: types and examples
4 / 5 / 23
Safety

4. 07 Investment scams. What to look out for?

Investment fraud is one of the most common recent threats that is oriented towards people who use the services ...

Loe lähemalt
4. 07 Investment scams. What to look out for?
4 / 5 / 23
Safety
Economics
Regulations

4. 06 Travel Rule

Travel rule is a rule well known from the traditional banking sector, which states that all funds sent from one ...

Loe lähemalt
4. 06 Travel Rule
14 / 3 / 23
Safety
Regulations

4.04 Illegal Activities in Crypto

In this lesson, we explore recent statistics and discover insights about criminal activities related to ...

Loe lähemalt
4.04 Illegal Activities in Crypto
16 / 1 / 22
Essentials
Economics
Investing

2.04 Understanding market capitalization

This lesson centers on understanding cryptocurrency market capitalization.

Loe lähemalt
2.04 Understanding market capitalization
16 / 1 / 22
Essentials

2.03 Common crypto trading terms

This lesson is a compilation of the most commonly used crypto trading terms.

Loe lähemalt
2.03 Common crypto trading terms
16 / 1 / 22
Bitcoin
Altcoin
Essentials

2.01 Why to invest in cryptocurrencies

This lesson explains why cryptocurrencies might be a good asset to include in your investment portfolio.

Loe lähemalt
2.01 Why to invest in cryptocurrencies
14 / 1 / 22
Essentials
Trading
Investing

2.07 Measuring market depth and liquidity

This lesson explains market depth, market liquidity, and volatility.

Loe lähemalt
2.07 Measuring market depth and liquidity
14 / 1 / 22
Safety
Investing

2.15 How to trade crypto responsibly

This lesson helps you understand the practices to trade crypto responsibly.

Loe lähemalt
2.15 How to trade crypto responsibly
14 / 1 / 22
Essentials
Trading
Investing

2.08 Three major types of trade orders you need to know

This lesson explains three major types of trade orders and how they work. 

Loe lähemalt
2.08 Three major types of trade orders you need to know
14 / 1 / 22
Safety
Investing

2.14 What are the common cryptocurrency scams?

This lesson discusses common cryptocurrency scams in detail.

Loe lähemalt
2.14 What are the common cryptocurrency scams?
14 / 1 / 22
Essentials
Trading
Investing

2.09 Fundamental and technical analysis for crypto trading

This lesson focuses on explaining how fundamental and technical analysis will help you assess cryptocurrencies.

Loe lähemalt
2.09 Fundamental and technical analysis for crypto trading
14 / 1 / 22
Essentials

2.10 Bull markets vs Bear markets

This lesson explains bull and bear markets and what you can do in each case.

Loe lähemalt
2.10 Bull markets vs Bear markets
14 / 1 / 22
Bitcoin
Essentials

1.08 What is Bitcoin?

In this lesson, we dig deep into the roots of the crypto and blockchain tree - Bitcoin.

Loe lähemalt
1.08 What is Bitcoin?
14 / 1 / 22
Bitcoin
Essentials

1.10 Sending and receiving Bitcoin

In this lesson, we explain how to send and receive Bitcoins.

Loe lähemalt
1.10 Sending and receiving Bitcoin
13 / 1 / 22
Bitcoin
Safety
Blockchain

1.13 Can Bitcoin network be hacked?

In this lesson, we discuss why it is nearly impossible to hack the Bitcoin blockchain.

Loe lähemalt
1.13 Can Bitcoin network be hacked?
13 / 1 / 22
Altcoin
Essentials

1.14 The fundamentals of altcoins

In this lesson, you learn about the fundamentals of altcoins.

Loe lähemalt
1.14 The fundamentals of altcoins
13 / 1 / 22
Altcoin
Essentials
Ethereum

1.20 What is Ethereum and how does it work?

This lesson helps you decode Ethereum thoroughly.

Loe lähemalt
1.20 What is Ethereum and how does it work?
13 / 1 / 22
Essentials
Safety

1.07 Best practices to keep your crypto safe

This lesson provides you with valuable tips and tricks to keep your cryptocurrencies safe.

Loe lähemalt
1.07 Best practices to keep your crypto safe
13 / 1 / 22
Essentials
Safety
Wallet

1.06 Understanding crypto wallet terms

In this lesson, we take a deep dive into crypto wallet terms like public and private keys, wallet address, and ...

Loe lähemalt
1.06 Understanding crypto wallet terms

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Zonda is now zondacrypto!

As the exchange continues to evolve and grow, we're thrilled to announce that we're rebranding and changing our name to better reflect our vision and values. We're still the same team you know and trust, but with a fresh new name that captures our spirit of innovation and customer-centric approach.

Some things may look a bit different but don’t worry - all operations remain the same and your login details work as usual.

Stay tuned for more updates and exciting changes as we embark on this new chapter together. Thank you for your continued support and loyalty!