How to store cryptocurrency assets safely?
Explore different types of cryptocurrency storage options and learn which one is Raison AI
Nowadays when news about the hacking of exchanges and user data leaks are getting common, it’s necessary to figure out the process again and ensure a safe haven for your crypto-assets before they get attacked by hackers.
Where do you store assets in the blockchain? You store them in a distributed database that has multiple copies. Your entry in this database has public and private keys. The address through which money is sent to you is the public key. If you paste the address of your public key into the block explorer (https://www.blockchain.com/explorer), you will get an asset balance.
In other words, knowing your address in the blockchain, anyone can track the history of operations in real-time. However, owners need a private key to get access to the cryptocurrency, which gives them the right to manage their assets. There are several options for storing cryptocurrency:
Exchanges
(such as Bittrex, Poloniex, ect.)
An indisputable advantage of Exchanges is the ability to convert a large amount of funds with the low commission and high profit. There are generally two types of orders on exchanges: market and limit. The market order is your acceptance with already existing exchange request from the counter-party, and the limit order is pricing on your own on terms and conditions that are convenient for you. In the first case, the transaction will pass quickly, and in the second — you will probably have to wait, but as a bonus for wasting time, there is a chance to make an exchange at a more favourable rate.
The big disadvantage of Exchanges is that they keep the client’s funds in their wallets, while the process of exchange takes place between the internal accounts of clients. In other words, you do not know where your cryptocurrency is actually located and whether a conversion is really done.
+ low exchange fees using fiat
+ large amount of liquidity
– storage of funds on third-party accounts
– security vulnerability
– difficult registration
Storing your cryptocurrency on the stock exchange is the riskiest way among those listed below of keeping your cryptocurrencies, with high hacking risks, even on large exchanges such as Mt.Gox, Bitfinex, Cryptopia.
Hardware wallets
(such as Ledger Nano S, Trezor)
This is one of the most reliable methods since each transaction is confirmed directly from the device that guarantees a high level of protection. Hacking risk is very low but still possible.
At the same time, this option is not suitable for daily use as you must constantly carry the device with you and connect it to your computer. In case of a loss, the restoration process is very difficult and usually losing the devices means losing of all your assets forever. The device itself is not a cheap solution as it costs $69-$149.
+ reliability
– lack of functionality with fiat currencies
– difficult to restore access when password is lost
– inconvenient in daily usage
– the cost of the device
Hard wallets are suitable for professional investors who keep a significant portion of crypto-assets in a safe place.
Software and online wallets without verification
(such as Exodus, Jaxx, MyEtherWallet, etc.)
They are counted as the fastest way to create your own wallet for storing cryptocurrency but it can be difficult to restore the access to the wallet if you lose the credentials. Online and software wallets are also most prone to hacking.
+ quick access without identity verification
+ the ability to exchange cryptocurrency
+ public storage addresses and anonymity
– lack of functionality with fiat currencies
– security vulnerabilities
– impossible to restore access when credentials are lost
Convenient use at high risk of asset loss.
Regulated financial institutions
(such as RAISON) Regulated financial institutions offer their services in accordance with governmental regulations. For example, RAISON is working under EU and US legislation. They offer the so-called non-custodial wallet — all the wallets inside the platform belong to each holder personally, this gives full transparency of operations in the network.
In Raison, you get the assurance that an exchange order is executed as you see each one directly in the blockchain. Whereas in other Exchanges, you cannot confirm the transaction in the blockchain and also you are not the owner of purchased crypto-assets until you withdraw it to your personal wallet.
Although every regulated wallets are obliged to carry out the KYC procedure, RAISON has an advantage — a fully compliant with regulations due diligence process is done within just 6 minutes. And also, if you lose your password, you are able to go through the re-identification procedure and have no worries about your funds.
+ licensed activities
+ fiat money exchange transactions
+ two-factor confirmation of any operation
+ restore access in case of losing password due to identification
– KYC and AML procedures
Reliable, simple and convenient option for daily use if the security of assets is more important than anonymity.