The primary concern of all cryptocurrency investors is where to store their Bitcoin, Ether, and other assets. Security breaches and hacks are prevalent, with the infamous Mt Gox breach being just one example of a series of attacks on traders' funds. These attacks have not decreased; instead, malicious actors have gotten bolder and more creative in their approaches. Most exchanges offer built-in wallets for simplicity of use, but before you choose your exchange, there are a few things you should consider.
Types Of Crypto Custody Wallets
There are many cryptocurrency custody services available, and typically they are classified into two types. The hot wallet and the cold wallet.
The Hot Wallet
The hot wallet is a wallet connected to the internet. Considering that a hot wallet is typically more convenient to use, it's a more popular option among crypto investors. This advantage is also a weakness of the hot wallet, as it is susceptible to hacks and security breaches. Regardless of whether you're a whale or a retail investor looking for a Bitcoin custody service, secure custody of ETH tokens, or other tokens, there is an alternative wallet that might suit your security needs better; the cold wallet.
The Cold Wallet
Cold wallets are also known as offline wallets. They can be useful if you plan to hold assets over an extended period of time, while they are not best suited for actively trading tokens. Cold wallets are physical devices that keep your private keys offline. These wallet types can be custodial (if you decide to use a third-party service storing crypto for you) or non-custodial depending on the trader’s preferences. Is it inconvenient to carry a cold wallet around? Not at all! Most of them are portable and can often be as small as a USB drive.
While there are many cold wallet options available, the most commonly seen are Trezor One, Ledger Nano X, and SafePal X1. While they are believed to be safer than hot wallets, their safety is dependent on how well the owner handles them. There are many stories of early Bitcoin investors who are unable to access their fortune due to losing credentials from their wallets. Bitcoin’s motto “Become your own bank” comes with both opportunities and threats.
Redot Custodial Wallet
Redot is a powerful crypto exchange that also offers crypto custody services. Unlike some non-custodial wallets, Redot is convenient and safe — It uses deep cold storage and other sophisticated means to protect traders' digital assets. If you are searching for a Bitcoin custody solution or other crypto custody services, Redot is the right call for you. To ensure security, Redot also offers additional measures such as monthly audit of transactions, withdrawal protection, an extra security layer with the 2-factor authentication, and the U2F, one of the most effective methods against phishing attempts.