When you store your coins you must ask yourself: Whom or what system do you trust? Because there are different types of wallets, as the table below shows. The private key serves as a proof of identity. The one who has this key has access your coins!

TypeHot/ColdRiskProsConsExample
Private keys stored at online providerHotVery high- Easy handling
- Can be used everywhere
- No Download necessary
- embezzlement possible
- No access in case of outage or shutdown
Coinbase*
Private keys encrypted at online provider (MultiSig)HotHigh- Easy handling
- Can be used everywhere
- No Download necessary
- There are Apps for that
- No access in case of outage or shutdownBlockchain
"Fat-Client", private keys stored locallyboth possiblemedium- Relatively easy handling- Download of the Blockchain 50-150 GB
- Responsibility about backup and access protection
- Can only be used at your own PC
Official BitCoin Client
"Light-Client", private keys stored locallyboth possiblemedium- Relatively easy handling
- Instant startup, no download of the blockchain necessary
- Responsibility about backup and access protection
- Can only be used at your own PC (if you don't create a special USB drive which contains the software)
Exodus
Hardware DongleColdLow- Extremely safe
- Total control
- Initial costs
- Cumbersome transactions
- Responsibility about backup and access protection
Ledger Nano S*
Paper WalletColdLow- Extremely safe
- Total control
- Responsibility about backup and access protectionBitAdress

Tips

Online services are therefore not suitable for permanent storage of your own cryptocurrencies.

It is recommended to use a local client, which let’s you have the private keys under your control. The client should encrypt the keys with a password as there are trojans which can empty your wallets. You can increase the security further by storing the keys only on an encrypted USB drive and connect it only when necessary. With this move you can transform a “Hot Wallet” to a “cold wallet”, which cannot be accessed without a physical connection to a computer.

For the additional encryption, VeraCrypt is a strong choice as. It’s available for many operating systems free of charge and it is considered very safe. Hardware and paper wallets go in the same direction.

Very important is that you backup your keys! Back them up at least twice.

Choose a wallet

In order to facilitate the investment in different cryptos, you can use wallets that support several altcoins. For example there is Jaxx and the hardware dongle Ledger Nano S*, but I have opted for Exodus. It has a nice and easy to understand user interface. The only thing that I’m not so sure about with Exodus is the recovery process. Here you can regain the private keys with a link from a mail. It’s don’t yet understand the technical process and if it is secure.

Jaxx and Exodus have also integrated the ShapeShift service, which seamlessly exchanges between different coins against a transaction fee of approximately 1-3%.

Exodus also has great support. This is also confirmed in other forums. I have asked if it will be possible in the future to generate additional Wallet addresses as with bitcoin, so I get a separate address for my mining. The answer was negative, but it came within an hour:

Multiple addresses may be enabled in the future for assets other than Bitcoin, however Exodus does not support multiple ETH address because along with Ethereum we support ERC20 tokens which use the ETH address in the wallet. With multiple ETH address sending and receiving ERC20 tokens would become quickly unmanageable and possibly result in loss of funds but more importantly cause a poor experience while using the wallet.

 

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