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By now we have covered acquisition, exchanges, basic trading skills, tools and strategies, and it is now time to look at storing. Most cryptocurrency investors are not day traders and a vast majority likely moves their coins less than twice a month, betting on a long hold speculation rather than intense trading.
If that is your case, then you do not want to leave you cryptos on exchanges. It might sound practical at first to just leave them their for when you want to sell, but it is in fact a very risky thing to do. That is because centralized exchanges keep your wallet’s private keys, and therefore are in control of your tokens. Also, the fact that they are centralized implies that they are open to hacking, which unfortunately happens very often. So remember, if you are not actively trading, take your money from the exchanges.
Now, take them where?
There are four main ways of storing your tokens outside exchanges and we will cover the first two in this article.
Online wallets are admittedly safer than leaving your coins on exchanges but not by much. Yes, if you use a wallet like MyEtherWallet, the most popular web-based wallet for Ethereum and ERC-20 tokens, you are in control of your private keys, but the fact that you use them on a web browser exposes you to hacking. Coinpayments is another web-based wallet that has gained in popularity as it is free and allows for the storage of over 700 hundred different currencies. Some browser plug-ins, like MetaMask offer an added sense of security as it does not force you to introduce your private keys to access the wallet. However, baring in mind its advantages over keeping your money on exchanges, it is hardly the best overall option to keep you coins safe.
After online wallets, Desktop wallets are the next best thing. These are probably the most commonly used form of storing for the average investor, albeit not the safest one. Desktop Wallets work like apps on your devices and are normally designed for any operating system and for mobile, allowing to pair different devices to access the same wallet on different platforms. Users have access to the private keys and are completely in control of their funds. Every coin has a native wallet developed for storing by the projects team. Ethereum and Bitcoin have many. Some, like NEO’s NEON Wallet pays dividends when users keep their NEO in the project’s own wallet. Most native wallets of well established projects are well designed and tested. However, a diversified portfolio would demand a growing and cumbersome number of wallets on your devices. Hence, multi-currency wallets started to emerge in recent years, capable of storing several different types of tokens. These are our top 3:
Exodus wallet is widely lauded as one of the slickest and best designed around and supports over 30 of the most popular tokens around. It has local encryption and leaves you in full control of your private keys so, as desktop wallets come, this is up there in terms of security and user-experience. It supports shapeshift which allows you to swap tokens inside the wallet itself.
Much like Exodus, Jaxx is a slick easy-to-use multi-cryptocurrency supporting desktop wallet with an inbuilt exchange. It supports a well designed mobile wallet application that can be paired across as many devices as desirable. It is very popular with crypto enthusiasts even if it has faced a few security challenges in the past. User support has improved considerably in recent months.
Coinomi is specially popular because it is by far the most wide-reaching when it comes to supporting different cryptos. Currently Coinomi supports as many as 200 different tokens, making it the most versatile in the market. However, users have complained of security issues and underwhelming user support from Coinomi.
In sum, as well designed and flexible as they might be, web-based and desktop wallets will always be open to attacks from third parties and your funds will never be completely secure. Our suggested wallets are perfectly fine to keep small amounts that are transferred fairly regularly and demand some comfort of use, but for the bulk of your capital, hardware wallets and cold storage are the way to. Check next article for more information.