As of now, it seems cryptocurrencies are new money. Blockchain evolution will certainly going to impact traditional way of making payments and sooner or later physical money will be obsolete, in my opinion, within the next few years. If you’re one of the few early birds who are observing this change and investing in future money then pat your back. But, accumulating this wealth without knowing how to safeguard it, is dangerous. This post will guide you on how to store cryptocurrencies safely and will help you know why should you buy a hardware wallet right now.
You just need to answer only four questions, I’m asking, to know, “Should you buy a hardware wallet?”
Should you buy a hardware wallet?
- Do you have your private keys?
- What if your cryptocurrency exchange got hacked?
- What if your country bans cryptocurrency?
- What if your exchange runs away?
If first question’s answer is ‘Yes’ then my friend you don’t need to read more. But if it is ‘No’ then you badly need to get answers of above asked questions. Let me help you answer these questions.
Do you have your private keys?
It is often said in cryptocurrency world that if you don’t own private keys of your coins then you really don’t own any coin. Cryptocurrencies wallet addresses are not associated with anyone’s name instead they belong to whosoever have their private key.
For your information, if you don’t know then a cryptocurrency wallet has two things; a public wallet address and wallet private key. Public address is required to receive the coins to the address and private key is required to send the same from that wallet. You can also call private key as a transaction password, just like internet banking password.
Now, if your coins are on a cryptocurrency exchange then it is obvious you would have your coins’ private keys. It would not be wrong if I say your exchange has control over your coin, not you. If you would need to send your coins to someone, you would need to request your exchange.
If you want to have complete control over your coins then you need to get your private keys.
You can get your private keys by cold storing, storing coins offline, your cryptocurrencies. You can cold store a cryptocurrency using paper wallet, nowadays obsolete, software wallet, and of course with a cryptocurrency hardware wallet like Ledger Nano X.
By storing your crypto offline, you can have complete control. If you do so then you are the owner. It is totally up to you whether you want to hold them or send them anyone. You can cold store then as long as you want and for that you don’t need to pay any maintenance charges like you pay in your bank savings account.
I personally suggest you store your coins in a Bitcoin hardware wallet (it can store altcoins too) and keep only amount of coins on an exchange which you need for day to day transactions.
Here are my hardware wallet recommendations:
For more information, read best hardware wallets to store cryptocurrencies.
What if your cryptocurrency exchange got hacked?
Everyday cryptocurrency exchanges including renowned ones cope with hundreds of cyber attacks. Exchanges have to win everyday and foil attacks at all costs and if any bad day an attacker won, all coins and personal information of yours at stake.
For your information, your cryptocurrency exchange flatly mentions that it will not be liable if such an incident happens, it is not going to reimburse your loses.
Did you read terms and conditions while opening your account with the exchange? Or you are just like me who just jump to ‘Continue’ button to complete the account opening process ASAP.
Hey, don’t be embarrassed everybody does so.
So if you choose to keep your coins on a cryptocurrency exchange then just remember you are not going to get reimbursement if your exchange got hacked.
Many trustworthy exchanges encourage their clients to move their investments to some other safe place and only keep the amount of coins on their trading platform for day to day transactions.
What if your country bans cryptocurrency?
Bitcoin was invented with a vision to make transactions without the need of third party. Now for the same reason everyone is adopting this.
What would be the value of our national currency if everybody started doing transactions using BTC? Will our government let us do so and let the national currency be obsolete?
Straight answer ‘NO’. They are going to let us do this. They will come up with hundreds of reasons including cryptocurrencies are highly volatile, we care for our people, we cannot let them indulge in such a risky business, cryptocurrencies can be used for illicit purposes (which is indeed a matter of concern), and so on.
Answer me what would you do if your country decides to implement immediate ban over cryptocurrencies?
You know cryptocurrency is the future and some coins are at a very fair price and have high potential to give unimaginable returns in the near future. But you country is forcing you exit from your investments and opt traditional so called safe investment options whose returns barely beat inflation.
But if you have stored your coins in an offline place using a cryptocurrency hardware wallet then you can simply store them as long as you want. And if you country let us do so by declaring your crypto investments and paying adequate tax then you will have option to stay invested and redeem decent returns in the future.
A hardware wallet enables you store cryptocurrencies offline and at the same time you can send and receive them anytime, anywhere.
What if your exchange runs away?
As demand of cryptocurrencies skyrocketing, more and more exchanges are coming into existence. No doubt, majority of the exchanges are in the market for long term business but some cunning ones also exist. Who just are there to run away one day. Many cryptocurrency exchanges had run with investors coins already in the past and there would not be any surprise if some other does so.
Unless your coins are on a reputed and well established exchange, you need to take it very seriously.
I hope above information would have helped you to know whether you should you buy a hardware wallet or not.
At the pen off, I only would like to tell you that if you have invested a significant portion of your earnings in cryptocurrencies then to safeguard them investing just $139 is totally worth it.
Frequently Asked Questions
Is a hardware wallet really necessary?
Yes, in my opinion, it is as necessary as investing in cryptocurrencies because it helps you have complete control over your crypto assets.
Can hardware wallets be hacked?
Yes, it can be if you install unauthorized software to use it. But no coin can be transferred without having physical access to your hardware wallet.
What if I lose my crypto hardware wallet?
You can buy a new hardware wallet and restore your wallets. Hardware wallets are PIN protected so if you lose them then no one can misuse them, until they have your access PIN.