Don’t Trust Coinbase To Honor Your Cryptocurrency Deposits In 2022 Bear Market

2 min read

trust cryptocurrency storage
Coinbase, Binance, FTX and Crypto.com are four of the most popular centralized cryptocurrency exchanges.
They are generally characterized by high liquidity, fast transaction speeds and convenience for crypto traders and investors.
The downsides are that these exchanges hold investors’ private keys, they are attractive targets for hackers and there are no deposit guarantees if they go out of business.
The easiest solution is for traders to not trust centralized exchanges with the bulk of their crypto assets, but only with the amount being actively traded.
Yahoo news emphasizes the importance of self-custody in the following post:
Cold storage wallets offer the best crypto security to guard your digital assets. Photo: Getty
Cold storage wallets offer the best crypto security to guard your digital assets. Photo: Getty

Cold storage wallets offer the best crypto security to guard your digital assets in the precarious conditions of bear markets.

With some crypto platforms currently freezing withdrawals due to harsh market conditions, the need for self-custody has become more important.

Centralised exchanges such as Coinbase (COIN), Gemini and Binance have so far honored the escalation of redemptions amid the current crypto-crash, but ultimately you don’t own digital assets until you hold them in your own wallet where you control the private keys.

You can do this by creating a new crypto address and storing the private keys for accessing it in a secure offline format, usually a flash-drive called a cold storage wallet.

Since the terra/Luna crash in May, crypto-platforms such as the Celsius Network have frozen accounts due to the spike in redemptions and the Voyager Digital exchange restricted the daily withdrawal limit to $10,000 (£8,140) because of exposure to the crisis-laden Three Arrows Capital crypto hedge-fund.

Cold storage wallet

Below is a step-by-step guide on how to create a new crypto address and store the private keys for accessing it in a secure offline format, usually a flash-drive called a cold storage wallet.

There are many different types of cold storage wallets that can be used to store crypto from companies like Trezor and Ledger.

Ledger is one of the most popular providers of cold storage wallets, with products such as the Nano X or Nano S, which look like USB sticks with small digital interfaces. They typically cost between $50 and $300.

After you have purchased a hardware wallet and plugged it into your computer, you will download the app that comes with the device.

A diamond studded Ledger Nano S cryptocurrency hardware wallet is seen displayed for sale on the floor of the Consensus 2018 blockchain technology conference in New York City, New York, U.S., May 16, 2018. REUTERS/Mike Segar
Ledger is one of the most popular providers of cold storage wallets, with products such as the Nano S, which look like USB sticks with small digital interfaces. Photo: Mike Segar/Reuters

This app will allow you to create a new wallet whose private keys will be stored on your cold storage device.

You will then be given a seed phrase, which you must write down on a piece of paper and keep offline.

This seed phrase will allow you access to your private keys if your cold storage device is lost or destroyed.

You will then set up a PIN for accessing your device. After entering and confirming your pin you can select the coins you want to store on your wallet.

The device will generate a new address so you can receive bitcoin (BTC-USD), ethereum (ETH-USD) or crypto from a different blockchain.

Transferring cryptocurrencies from online hot wallets to cold storage wallets

Go to the online exchange or other “hot wallet” location where your bitcoin or other cryptocurrencies are stored and send them to your new cold storage wallet address.

Apart from your cold storage wallet getting lost or damaged, another danger is buying your crypto cold storage wallets from an unofficial supplier. You could end up with a rigged device that has pre-programmed seed words that can be used to unlock your assets.

The easiest way to protect against receiving a corrupted device is to buy directly known official manufacturers of cold storage wallets, such as Trezor, Ledger or Keep Key.

Related Content:

Crypto Wallets 101

MetaMask Wallet Scam Victim Lifeline Goes Beyond Crypto Asset Protection.

DISCLAIMER

We are not accountants, financial advisors, attorneys, or tax advisers, and as such we cannot and do not give advice on financial, tax, or legal matters. Our trainings and services are for educational and entertainment purposes only. No matter what you may hear us discuss, which is based on our own personal experiences and/or that of our customers, in the end our best advice is… DYOR (Do Your Own Research) and consult your own accountant, financial advisor, legal advisor, and/or tax advisor before investing. As with any other investment opportunity, cryptocurrencies have risk and it is possible that you may lose anything you invest. Therefore, you should not risk money you cannot afford to lose. It is important to repeat… do your own research and make your own informed decisions about how to invest your money.

Original article can be found at;//news.yahoo.com/safely-transfer-crypto-cold-storage-wallet-143330083.html

Via this site

Have A Story? Get Featured On Heliumaxxent Plus 100+ More Exclusive Crypto News Sites