To use a cryptocurrency, for example, Bitcoin, you need to buy Bitcoin and create a wallet. The majority of beginners store their coins on the cryptocurrency exchanges where they bought them. This is a risky storage method, because centralized exchanges don’t create a special wallet for you. They simply create a record in their system saying that user [email protected] bought 1 BTC and they promise to deliver your Bitcoin upon the request. If you decide to keep your “promised” bitcoin on such exchange, you will lose it once the company files bankruptcy or is simply hacked. This happened multiple times since 2009 (e.g. MT.Gox exchange hack) because crypto exchanges are lucrative targets for hackers.
The safest way to store cryptocurrency is offline on a what is called a hardware wallet (also called a cold wallet) to protect yourself from hacking and theft of funds.
The hardware wallets, Ledger Nano S and Trezor One are considered one of the safest. Both support more than 1000 cryptocurrencies and cost around $60. There are more expensive products from both companies available as well, so feel safe to shop for other models as well. The wallet is easy to set up, and you can immediately transfer the cryptocurrency purchased on the exchange to it. Make sure to buy wallets from the official store or reseller, and check the box upon arrival. We don’t recommend buying it from Amazon or eBay, due to the risk of receiving a wallet where your private key has been exposed. If your package is damaged or opened – never use such a wallet, it most likely was compromised on the way from the manufacturer to your home. If the seller is official and the box looks unopened then you are good to start using it as your safe cryptocurrency storage device.