How To Store Crypto Safely

Public and Private Keys

Every crypto wallet is built around two things:

● Public key (or address): This is what you share to receive funds. It’s like your email address. The sender needs to know it in order to send crypto to your wallet.

● Private key: This gives access to your crypto and must be kept secret. It’s like the password to your email; if someone else has it, they can take everything.

Wallets store these keys and interact with the blockchain to send, receive, and monitor balances. The blockchain itself doesn’t hold your crypto; your keys do.

Hot Wallets vs. Cold Wallets

Wallets are generally classified as either hot or cold, depending on their internet connectivity:

● Hot wallets: Connected to the internet. Examples include browser extensions (MetaMask), mobile apps (Trust Wallet), and exchange-hosted wallets (like Webull Pay’s crypto custodian, Coinbase)

○ Pros: Convenient for frequent transactions, easy to use.

○ Cons: Higher risk of hacks, phishing, and malware.

● Cold wallets: Offline and not connected to the internet. These include hardware wallets (Ledger, Trezor) and paper (yes, actual physical document) wallets.

○ Pros: Highly secure from remote attacks.

○ Cons: Less convenient, easy to misplace or damage if not backed up.

While cold wallets offer strong offline security for long-term holdings, hot wallets are often the better choice for everyday use thanks to their convenience, speed, and ease of access.

Custodial vs. Non-Custodial Wallets

Ownership in crypto depends on who controls the private keys:

● Custodial wallets: A third party, like a centralized exchange, holds your keys. You log in with a username and password. Custodial wallets are always considered hotwallets.

○ Pros: Simple setup, easier recovery options.

○ Cons: You don’t fully control your assets. If the custodian is hacked or freezes withdrawals, your funds are at risk.

● Non-custodial wallets: You hold the keys and are responsible for securing them. Non-custodial wallets can be hot (e.g., MetaMask) or cold (e.g., Ledger) wallets.

○ Pros: Full ownership and control.

○ Cons: No backup or recovery help if you lose your keys or seed phrase.

The comparison of custodial and non-custodial wallets follows a similar logic of warm and cold wallets: while non-custodial wallets offer full control for experienced users, custodial wallets are often preferred by beginners for their ease of use, built-in recovery options, and familiar login experience.

Best Practices for Crypto Security

Managing crypto securely requires proactive habits. Some recommendations to keep your crypto safe:

● Write down your recovery phrase (not digitally) and store it in a safe location.

● Use two-factor authentication (2FA) on exchange accounts.

● Avoid phishing scams. Double-check URLs, don’t click suspicious links, and never share your seed phrase.

● Use a password manager to generate strong, unique passwords for crypto accounts.

● Update software regularly for wallets, browsers, and hardware devices.

● Test small transactions first when sending to a new address.

While cold wallets are a popular option for long-term storage, keeping funds in a secure custodial wallet (i.e., Webull Pay’s partnership with Coinbase) offers convenience, protection, and easy access for active users.

Conclusion

Crypto security should be a top consideration from the moment you dip your toes into the asset class. The freedom to own digital assets comes with the obligation to safeguard them. By understanding how wallets work, choosing the right custody option, and following security best practices, you can significantly reduce your risk of theft or loss.

In the next chapter, we’ll explore how crypto is regulated and taxed, alongside key considerations for your investing journey in digital assets.