While cryptocurrencies are a fairly new way to invest your money, they often offer a far higher return than traditional investments. This can make learning about crypto a worthwhile investment of your time and money. For those who are unfamiliar with the concept, cryptocurrency is an unregulated, digital form of currency or asset that is secured by cryptography.
There are many different investment strategies when it comes to cryptocurrency. Some people may swear by short selling, some people may prefer accumulating cryptocurrency to reap long term rewards. Whatever your investment strategy is, you will need to store your cryptocurrency keys on a secure platform.
With its rising popularity, it’s the perfect time to invest in cryptocurrency! But with all the new technological jargon and software, making an informed financial decision can be overwhelming.
Luckily, we’ve compiled a handy guide on everything you need to know about cryptocurrency wallets. That’s why we pride ourselves on being South Africa’s information hub for all things related to finance and money.
Remember that cryptocurrency is not physically accessible and cannot be stored in your wallet, safe, or South African bank account. Upon purchase of coins or tokens, you will receive a private key and a public key. A public key allows wallets to be identified without revealing your personal details. This ensures secure transactions that are anonymous but still traceable. Your private key acts as your proof of ownership when making transactions and is used to create a digital signature.
Crypto exchange platforms are primarily for purchasing and trading currency; some platforms may also offer digital wallet services. Digital wallets offered by crypto exchange platforms are ideal short term storage solutions. This is particularly true if you are more interested in trading crypto. While the digital wallets offered by crypto exchange platforms may be secure to an extent, there is a higher risk of falling victim to security breaches.
One of the risks that come with buying crypto is that your account could be hacked, and your private keys stolen. This means hackers can gain access to your cryptocurrency platform account and balances.
An easy way to combat this is by transferring your cryptocurrency coins or tokens to a noncustodial wallet. There are a few types of digital wallets including blockchain wallets, hot wallets and cold wallets.
The term "blockchain" is somewhat synonymous with cryptocurrency. In essence, a blockchain is a record of all the transactions that have occurred. This record is maintained by a network of computers that safeguards against security breaches and alterations. Blockchain wallets allow you to store various cryptocurrencies in one wallet using a blockchain system.
While blockchain wallets are a type of digital wallets, Blockchain wallets are also the name of a digital wallet created by a company called Blockchain. Blockchain boasts an accessible interface, current investment information, and the ability to buy currency directly.
Hot wallets refer to digital wallets that are constantly connected to the internet and an online server. These types of wallets are useful for storing cryptocurrency as well as sending and receiving cryptocurrency. In terms of security, hot wallets usually link both a public and a private key.
The most notable downside when it comes to hot wallets is that there is a higher degree of risk compared to cold wallets. This comes as a result of being connected to the internet and utilising an online system.
Cold wallets are also digital wallets that can store your cryptocurrency information, however cold wallets are offline. A cold wallet is usually the safest kind of digital wallet that you can use, as you are protected from hackers and online security breaches.
Also known as hardware wallets, cold wallets can come in the form of a USB, hard drive, offline computer, or even a printout. Some people may opt to print out their private key information using an offline printer; this usually comes with a handy scannable QR code for quick transactions.
Let’s look at a few ways South African investors can store their cryptocurrency:
Exodus is an extremely popular cryptocurrency wallet that offers mobile, desktop, and hardware options. From Bitcoin to Ethereum and more, Exodus offers storage solutions for up to 155 cryptocurrencies.
Besides offering secure storage solutions, Exodus also allows you to exchange cryptocurrencies and manage your digital assets with ease. In terms of privacy, Exodus encrypts your private keys without you needing to register an account or provide traceable personal details.
Trezor is a cold wallet that allows consumers to store their cryptocurrencies offline using Trezor’s hardware. One of the key advantages of Trezor’s hardware is that it has been audited by security researchers; they have a proven track record when it comes to security.
Exodus and Trezor have partnered to offer consumers secure hardware storage that is linked to their Exodus wallet. All you have to do is get a Trezor, install Trezor bridge, and then open Exodus with your Trezor plugged in.
Coinbase offers storage for up to 5 500 different types of digital currency, including cryptocurrencies and NFTs. The wallet is quick to set up and the digital platform is easy to navigate; this makes Coinbase ideal for beginners. Its parent company, Coinbase is a well-established crypto exchange platform; the Coinbase wallet is one of the safer options when it comes to online digital wallets.
Cryptocurrency can be safely and securely purchased from crypto exchange platforms using fiat currency such as the South African rand. For South African investors there are a few popular exchange platforms such as Ovex, Valr, ChainEx, and Luno.
After purchasing cryptocurrency it’s wise to move your digital assets to a separate storage facility. This can be an online digital wallet, a hardware wallet, or an offline wallet created at home. The most important things to look for in a crypto wallet is authenticity and security. When researching crypto wallets, look out for wallets that are open source, or have been reviewed by independent security organisations and auditors.
Finding the right crypto wallet depends on your needs, experience, and comfort level. If you’re new to buying cryptocurrency or inexperienced when it comes to technology, it may be easier to use an online platform like Coinbase. However, if your only concern is security then using an offline or hardware wallet like the Exodus or Ledger wallets may be a better option.
Although it may seem unnecessary, it can be extremely useful to find out how your crypto wallet works. Legitimate platforms should be transparent in how their technology works and how your personal information is used. This can help you navigate the platform with more confidence, understand changes to terms and conditions, and make safer financial choices.
As with any form of online banking, there are plenty of scams that you need to be wary of. Some popular scams include phishing, fake giveaways, extortion, and fake business opportunities. Refrain from clicking on links sent via your email or social media, and thoroughly read any communication you receive asking you to transfer funds or enter personal information.
When it comes to investments, there’s always risk involved. Luckily, BudgetGist is here to keep you informed. We are South Africa’s information hub for all things related to finance and money.
As we catapult into the digital age, the use of digital assets is becoming increasingly popular. And for good reason! The value and return on investment of digital assets is far greater than that of traditional assets. But with increased profits come the increased risks of being hacked and having your assets stolen. The most […]
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