EXPLAINED: How to store your crypto safely and avoid hacks
Crypto exchanges and Decentralised Finance platforms are prone to hacks and financial instabilities. Experts advise investors to not store their crypto on such platforms. Find out here about alternate safe places where you can store your crypto.
- Jul 18, 2022,
- Updated Jul 18, 2022 4:29 PM IST
In light of the various hacks and liquidations of crypto exchanges and Decentralise Finance (DeFi) platforms, experts advise crypto investors to not keep their crypto funds in any such places. But what other options do investors have?
Well, investors have not just one, but several other options, based on their requirements. But let us first understand why it is not safe to store your crypto in the aforementioned places.
Why should you not store your crypto on an exchange or on any DeFi platform?
It is advisable to not store one's crypto holdings on any centralised platform like exchanges or DeFi platforms. It is because the custody of the funds is with the platform itself and not the investor. Moreover, these platforms are prone to hacks.
In the recent past, DeFi platforms, like the Celsius Network, 3 Arrows Capital, Voyager Digital, Vauld, and other faced financial strains because of which investors' funds became inaccessible. And hence investors are advised to store their cryptos in different types of crypto wallets.
(a)Desktop Wallets
These are software packages that may be installed on numerous operating systems and are becoming more popular over time. Anti-virus protection is required since any computer linked to the internet poses significant security hazards. Desktop crypto wallets are preferable over holding cryptocurrency on an exchange because of incessant hacks on exchanges.
b) Mobile Applications
Mobile apps are similar to desktop wallets. These wallets are designed to be utilised on mobile phones. They are particularly convenient because they conduct transactions using QR codes. They are appropriate for frequent everyday use. However, they are vulnerable to malware attacks. Encryption is required for mobile wallets. They are portable and convenient, yet they are vulnerable to viruses. Two popular mobile wallets are Coinomi and Mycelium.
(c) Browser based wallets
These wallets can be added as browser extensions on your browser. It is worth noting that private keys in the case of browser extension wallets are susceptible to DDOS attacks. They can be hosted by themselves or by a third party. Being self-hosted is preferred since money is always in the investors control. Two examples of browser extension wallets are MetaMask and Coinbase.
Also Read: MATIC crypto zooms 20%, Polygon Joins Disney’s 2022 Accelerator Program - BusinessToday
Also Read: Bitcoin reclaims $21,000, Polygon rallies 6% as crypto markets recover after rout - BusinessToday
In light of the various hacks and liquidations of crypto exchanges and Decentralise Finance (DeFi) platforms, experts advise crypto investors to not keep their crypto funds in any such places. But what other options do investors have?
Well, investors have not just one, but several other options, based on their requirements. But let us first understand why it is not safe to store your crypto in the aforementioned places.
Why should you not store your crypto on an exchange or on any DeFi platform?
It is advisable to not store one's crypto holdings on any centralised platform like exchanges or DeFi platforms. It is because the custody of the funds is with the platform itself and not the investor. Moreover, these platforms are prone to hacks.
In the recent past, DeFi platforms, like the Celsius Network, 3 Arrows Capital, Voyager Digital, Vauld, and other faced financial strains because of which investors' funds became inaccessible. And hence investors are advised to store their cryptos in different types of crypto wallets.
(a)Desktop Wallets
These are software packages that may be installed on numerous operating systems and are becoming more popular over time. Anti-virus protection is required since any computer linked to the internet poses significant security hazards. Desktop crypto wallets are preferable over holding cryptocurrency on an exchange because of incessant hacks on exchanges.
b) Mobile Applications
Mobile apps are similar to desktop wallets. These wallets are designed to be utilised on mobile phones. They are particularly convenient because they conduct transactions using QR codes. They are appropriate for frequent everyday use. However, they are vulnerable to malware attacks. Encryption is required for mobile wallets. They are portable and convenient, yet they are vulnerable to viruses. Two popular mobile wallets are Coinomi and Mycelium.
(c) Browser based wallets
These wallets can be added as browser extensions on your browser. It is worth noting that private keys in the case of browser extension wallets are susceptible to DDOS attacks. They can be hosted by themselves or by a third party. Being self-hosted is preferred since money is always in the investors control. Two examples of browser extension wallets are MetaMask and Coinbase.
Also Read: MATIC crypto zooms 20%, Polygon Joins Disney’s 2022 Accelerator Program - BusinessToday
Also Read: Bitcoin reclaims $21,000, Polygon rallies 6% as crypto markets recover after rout - BusinessToday