BloomChain decided to ask the experts what methods they choose to store their digital assets.
The rise in the value of the most capitalized cryptocurrency – bitcoin – provoked an influx of investors into the digital assets market. One of the most important components of a successful investment in a new financial instrument was the organization of conditions for its safe storage.
Unfortunately, many of the investor instructions available online contain outdated or inaccurate information about cryptocurrency wallets. To solve the problem, the Bloomchain editors asked experts to share their methods of storing digital assets.
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Why you shouldn’t consider exchanges
CEO of TTM Bank Vladislav Utushkin, first of all, I drew attention to the fact that many investors hold cryptocurrency on exchanges. He noted that trading floors should not be perceived as storage facilities.
“The exchange is needed for trading. And this is a very common mistake among beginners: buy a cryptocurrency, transfer it to a cryptocurrency exchange deposit, try to trade, be disappointed in this (because there are no trading skills), and leave the crypt stored on the exchange, “Vladislav Utushkin noted.
In his opinion, exchanges should not be trusted with large assets because the funds on the platform’s accounts, he believes, automatically fall into the disposal of its organizers. Thus, the very idea of cryptocurrencies – control over assets in the hands of the owner, as the expert noted, is lost.
“It’s the same as keeping money in a bank. When money is in a bank account, it is not your money – it is the bank’s money, and he decides how to dispose of it. The bank allegedly has an obligation to return them to you, but in fact, this is not your money, ”Vladislav Utushkin explained his point of view.
The expert told Bloomchain that he was considering buying a crypto exchange. To this end, he conducted technical and financial audits. What he and the team found during the inspections, he said, was terrifying.
“As a rule, crypto-exchanges found a significant cash gap, which was skillfully hushed up in public data. Exchanges like to get into users’ money, draw trading volumes. At the expense of some, the withdrawal of funds from other clients was ensured. They have such a pyramid-like scheme of work, and a lot of trading platforms operate according to it, ”Vladislav Utushkin explained his point of view.
When it comes to large assets, in his opinion, you should choose offline storage. Hardware wallets are suitable for this purpose. For example Tezos and Ledger. The safest option, in his opinion, is hardware offline storage with multi-signatures.
Another vote for storage hardware
Founder of ENCRY Foundation Roman Nekrasov also drew attention to hardware wallets. In his opinion, they are more likely intended for storing cryptocurrencies of novice users. Professionals, according to the expert, still store them on their own on a secure medium, which often does not have access to the network. This method, in his opinion, is reliable. At the same time, he also does not recommend exchanges as an option for storing cryptocurrencies.
“I never tire of repeating: in no case should you keep funds on centralized exchanges. This always leads to sad results, ”the expert noted.
For beginners, in his opinion, wallets from Trezor are suitable. Other companies, Roman Nekrasov noted, were featured in user data leak scandals. Trezor has, in his opinion, the highest trust rating.
Read also: Ledger wallet users faced threats due to company data leak
Alternative point of view
EMFINANCE Director Evgeniy Marchenko believes that the issues of digital security in general and the storage of cryptocurrencies in particular are becoming more and more relevant and, probably, in the next couple of years, users will see technological breakthroughs in this area.
At the moment, the expert noted, one has to choose from what is, and this choice must always be made independently. In his opinion, one cannot definitely recommend only a hardware wallet or only an online service. The main selection criteria, he believes, should be the investor’s internal beliefs and personal preferences, the amount of investment and his lifestyle.
For example, if the choice is between cheap Chinese devices, then, according to Evgeny Marchenko, it is better to temporarily prefer online services and save money to buy a normal gadget.
In the matter of storage, according to the expert, calmness is important. If it is easier for an investor to sleep knowing that tokens are stored on a physical medium under the pillow, he advises choosing hardware wallets. Moreover, in this case, as Yevgeny Marchenko dismissed, the user must accept the risk of a possible loss of the device for various reasons.
The expert also commented on the choice of trading platforms for storing cryptocurrency. Major exchanges, in his opinion, have the best security systems in the modern world.
“If we compare the degree of reliability of exchanges, then it exceeds any hardware wallets. However, the attention of exchange hackers is also attracted more than individual private investors, ”the expert explained his point of view.
Thus, according to Evgeny Marchenko, both approaches have pros and cons. With a large deposit, he believes, an option may be to split the tokens across different wallets.
“In addition, there are exchanges that support hardware storage in your wallet,” concluded the expert.
He also shared his point of view with Bloomchain CEO of Koshelek.ru, Mikhail Bogdanov
Bloomchain: Do you think it is mandatory to purchase hardware wallets to store crypto securely?
No, not necessarily – it all depends on your needs. There are many wallets out there now that don’t have access to your private keys. If this is not enough, paper wallets can also be used.
Bloomchain: Should Assets Be Trusted by Large Exchanges?
Yes, they certainly have theft and security problems, but who does not. The main thing is that there are many precedents when exchanges took responsibility and returned money to users, so you should not be afraid to transfer money to exchanges if you need to use their services.
We will remind, earlier experts shared with Bloomchain forecasts for bitcoin.