Last month we covered a story on the storage of Ethereum and the importance of understanding the many ways in which cryptocurrency can be scored. Online and offline, the way you store your crypto dictates a range of different things, from your management, the fees you pay and even the security of your assets. Of course, each method has a range of advantages and disadvantages but the idea is the same no matter what you’re storing. Whether it’s Ethereum or Stellar, you have to be careful when it comes to storing your crypto.
As we stated last time:
“Hot storage, or online storage refers to cryptocurrency that is stored at a location contacted to an online network. A great and common example of this is when you buy cryptocurrency from an exchange and then store it within that exchange, on an exchange based wallet. This is great, because it’s easy to access (you don’t need to worry about losing your private key and can access it anywhere with an internet connection).”
However, online storage does mean your Stellar XLM could be accessed by external factions, including bad actors that intend to steal your money. By having your assets online, they are more exposed to a chance of being hacked. If this happens, you lose out.
On the other hand, cold storage could be a more suitable option for Stellar:
“Cold storage, or offline storage refers to cryptocurrency stored offline in physical wallets, hard drive and even mobile phones. This is great, because you alone are responsible for the security of your cryptocurrency. Assuming you don’t give your wallet away to someone else (and your private key of course), nobody can access those assets, meaning they are essentially hack proof (minus some exceptions).”
Clumsy people take heed - if you store your Stellar offline, you might be safe from hackers, but are you safe from yourself? Cold storage allows your Stellar XLM to behave like real money in your pocket. If you lose your wallet or your private key (the password that allows you to access it) then you lose the money. Cold storage is considered more secure but remember, it’s easier to misplace if you store your Stellar XLM this way.