While I wrote my article about exchanges in crypto and how they lose you money, I noticed something.
A lot of you guys aren’t either aware of cold storage or you got blinded by CZ from Binance.
He said you can keep your coins on a safe exchange like Binance because funds are #SAFU. The insurance fund, Binance is growing with every trade which would come up for their customers’ losses. In an event of hacking the exchange or similar.
Check out the article I was just referring to why this is bullshit.
But in this blog post, I will go into detail what cold storage is, why it is better than anything else and why you should definitely have it. Under your bed.
New money, old techniques
Despite cryptocurrencies being a completely new form of money, the way you store it should be old fashioned.
We drove away from it over the past decades where it is just totally fine to have ALL your funds stored at your local banks’ server. Like, literally ALL your wealth. Stored on a strangers computer.
This sentence alone should tingle your senses.
It just seems wrong.
Because it is.
You get to see the results of this blind trust every day. Banks laundering billions of dollars. Being only fined millions. Which is why they just keep doing it.
Spending more of the money you bring than they actually have. Virtually using money that doesn’t even exist. Not even digitally.
In my opinion, the financial sector has lost its mind. We are miles away from sound usage for our means of payment.
Banks are going apeshit.
But luckily crypto is here for salvation. And you should start it first.
Cold as ice
Think about your money lying around on a banks’ server as a hot chair. Not only does a portion of it burn away all the time (inflation), but you’re always on the brink of losing it all.
Since someone is occupying the chair.
Some banker with his fat ass.
Why would you ever leave your hard earned money there?
Which is why you should definitely use a cold storage for your cryptocurrencies.
How it works
Cold storage technically refers to any form of storing your coins that isn’t online (simply put). So you could also use a paper wallet, but I won’t go into that now.
This post is about hardware wallets, since they are convenient and safe.
A hardware wallet is a device which stores your private keys.
They can only keep those keys and create spending transactions. That’s literally all they do.
Which is a good
Small foray: The private keys are basically the “ticket” which allows someone to spend Bitcoins. Every wallet has its own private keys. If you park your Bitcoins on an exchange, the exchange has the private keys for your coins. Not you. If you move Bitcoin, you don’t actually move the Bitcoins around, you just give someone else the keys which ultimately makes them the owner.
Pro’s and… really no con’s
- the private keys are stored in a microcontroller on the device, so they can’t be transferred out of the device in plain text (security)
- immune to computer viruses that steal from software wallets
- autarchic. The keys never need to touch software (or a hot chair)
- most of the time, the software is open-source. So you could check the integrity.
You can technically store your keys on the hardware wallet and then store the hardware wallet under your bed.
So, YOUR money will actually be at YOUR place.
With the advantage on top, that if thieves were to rob your house and steal your wallet, they can’t just spend the money.
Like they could with hard cash.
The bottom line is, if you don’t store your money (at least the biggest chunk of it) like that, you’re an idiot.
How to choose
There is a multitude of hardware wallets in existence. Considering the age of the cryptocurrency space, there will probably a lot more be in existence in the future.
I recommend two hardware wallets.
Which one of the two you choose comes probably down to aesthetics.
The first one is the Ledger Nano S. You can get it on Amazon here or by clicking on the picture.
The second one is the Trezor One. Get it on Amazon here.
They are both easy to use and great for security.
Get one today and keep your mind sane.
“How does it keep my mind sane?”
A sane mind is a resting mind. Chilled. And you can chill really hard if you know your money is safe. Not on a hot chair. Not in the hands of some stranger on an exchange.
No matter how good and “safe” the exchange might actually be.