Cryptocurrency storage refers to the process of keeping your cryptocurrency safe and secure.

There are a number of different ways to store cryptocurrency, each with its own advantages and disadvantages.

‍Custodial vs Non-custodial

‍In custodial storage, a third party holds your cryptocurrency for you, such as a centralized exchange. This is often the method that those new into crypto opt for, but it means that you are trusting the third party with your assets. If the third party is hacked or goes bankrupt, you could lose your cryptocurrency. Remember: not your keys, not your crypto.

In non-custodial storage, you hold your own cryptocurrency. This is the most secure way to store cryptocurrency, as you do not have to trust anyone else with your assets. However, it also means that you are responsible for security. If you lose your private keys, you will lose your cryptocurrency.

‍CEX

‍A centralized exchange (CEX) is an online platform that allows users to buy, sell, and trade cryptocurrency. CEXs typically offer custodial storage for their users’ cryptocurrency. This means that the CEX holds your cryptocurrency on your behalf.

Pros:
- Convenient for making transactions
- Easy to set up

Cons:
- Less secure than non-custodial storage
- You are trusting a third party with your assets
- Not your keys, not your crypto
- External factors could mean loss of access to your funds
- May not support small cap currencies

‍Hot Wallet

‍A hot wallet is a cryptocurrency wallet that is connected to the internet. Hot wallets are convenient for making transactions, but they are also more vulnerable to hacking attacks than cold wallets. Popular wallets are MetaMask and TrustWallet.

Pros:
- Convenient for making transactions
- Easy to set up
- Non-custodial — you are in control of your funds
- Support multi-chain and small caps

Cons:
- Less secure than cold wallets
- More vulnerable to hacking attacks

‍Cold Wallet

‍A cold wallet is a cryptocurrency wallet that is not connected to the internet. Cold wallets are more secure than hot wallets, but they are also less convenient for making transactions.

Pros:
- Very secure
- Less vulnerable to hacking attacks
- Not connected to the internet

Cons:
- Not as convenient for making transactions
- More difficult to set up
- More expensive than hot wallets
- Software updates can impact security

‍Multisig

‍Multisig is a security feature that allows multiple people/wallets to control a cryptocurrency wallet, as more than one signature is required for a transaction to go through. This means that no single person can access the funds in the wallet without the approval of the other people/wallets involved.

Pros:
- Very secure
- Requires multiple people to approve transactions, making it more difficult for hackers to steal funds
- Can be used to store large amounts of cryptocurrency

Cons:
- More difficult to set up than a single-sig wallet
- Makes quick movement of funds (eg in market shifts) difficult

‍Which storage method is right for you?

‍The best storage method for you will depend on your individual needs and preferences. You should always consider the security of your funds when deciding which wallet option to use. And remember, not your keys, not your crypto.

‍Foxify incorporates a one-click non-custodial wallet creation via OptiTrade Technology when using the platform.

Disclaimer: any information provided by Foxify as part of the Academy is for informational/educational purposes only and not financial advice. Please always do your own research.