The importance of crypto storage
Updated: Sep 2, 2021
Getting into cryptocurrency for the first time can be an exciting and sometimes overwhelming experience. If you have gotten over the learning curve and now have crypto in your portfolio, congrats! However, your crypto journey doesn’t end there. The next step is to ensure your crypto holdings are stored in a safe and secure place and that you know what storage strategy you’re using and why.
Why is this important?
You may have heard the phrase in the cryptosphere, “Be your own bank”. It's an aspect of crypto that makes it so disruptively beautiful and unique in comparison to any existing fiat currency system. A decentralized, disintermediated, self sovereign, digital, nationless, borderless way to store, send and receive monetary value. Mmm, that’s juicy. Especially to those in countries with unstable economies, corrupt governments, hyper inflated currencies and human rights restrictions. Cryptocurrency also appeals to those looking to diversify their assets, hedge against inflation and partake in the future of finance. (Note: If you're scratching your head at some of the above concepts and words, you may want to check out our foundational Bitcoin for Beginners workshop)
While “Be your own bank” is a powerful core tenet of crypto, in practice and philosophically, it also implies that “With great power comes great responsibility.” And the responsibility of being your own bank, and being the sole caretaker of your crypto, can be appealing to some it can also be being overwhelming to others. This is why we are seeing a number of options emerge for how to store your crypto - from self storage solutions like hardware wallets to 3rd party crypto banks where you can even earn yield on your holdings to innovative hybrid options. No matter what your preferences are, there are a variety of choices and storage options to consider.
At the end of the day though, it's all about increasing security and reducing the risk to avoid scenarios like:
Losing/misplacing your crypto (this is more common than you may think, it is estimated that 3.7 million bitcoin are lost, 20% of current supply, $185 million at $50k per BTC)
Having your crypto stolen
Storing your crypto on a platform that gets hacked, like an exchange (even the biggest exchanges suffer from hacks)
Putting your eggs in one basket, and then losing the basket. Figuratively speaking.
Feeling anxiety about your crypto assets
Learning how to store your crypto will bring you a greater sense of confidence and security while protecting your digital assets for years to come.
It’s important to have an understanding of the different types of crypto storage and custody options available to you so you can make an informed decision and action plan around how to safely and securely store your crypto assets.
Ask yourself…
Before deciding how and where you’d like to store your crypto, we recommend asking yourself the following questions:
1. Do you want to practice, in full or in part, the core crypto philosophy of "Being your own bank"?
2. Do you understand the different ways to store crypto and the pros and cons of each? (non-custodial, custodial, hot wallet, cold storage, etc)
3. Do you want to spread the risk by storing your crypto in multiple locations?
4. What percentage of your crypto portfolio do you want to allocate and where?
5. Will you be actively trading cryptocurrency and therefore need some of it easily accessible on an exchange? Or do you intend to be a long-term holder and ok with accessing your funds less frequently? (or a combo of both)
6. Do you appreciate personalized support or do you prefer a DIY approach? Or a combo of sorts?
7. Do you have heirs you’d like to have inherit your crypto? What storage options would they be comfortable with?
8. What kind of lifestyle do you lead? Are you organized? Do you have a safe place to store sensitive information? Do you move around a lot?
9. Do you want to earn a yield on your crypto holdings? Do you understand the risks and rewards of this?
10. What storage solutions make the most sense and are available for where you live?
11. Keeping it simple is ideal in many circumstances, how can you minimize complexity?
12. What regular habits are best practice for managing your crypto storage?
Keep learning, always
Crypto storage is a new and unfamiliar topic to most everyone on the planet! Remember, less than 2% of the world’s population own crypto. Plus, the majority of those that do, still have a lot to learn. If you’ve read this far, you’re already ahead of the curve. If you don’t have all the answers to the above questions, there’s an opportunity upgrade your crypto journey to the next level. If self studying and scrolling through endless Google results and YouTube videos sounds overwhelming, we got you. Our 90 minute workshop will fast-track your knowledge on How to Store Your Crypto. It’s comprehensive, easy to understand, and will save you a ton of time while giving you the knowledge to develop a strategy to protect your crypto holdings.
Happy hodling and stay safe out there!