Crypto world: what are soft/hot wallets and why they are essential for those who invest

The latest cryptocurrency news discouraged many potential investors. In recent months, it several have fallen or disappeared exchanges (as in the case of FTX) with the cryptos of its users. This is very clear proof of how the crypto economy is advancing by leaps and bounds, but well above the education and knowledge of the average user.

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With this panorama captured, it is essential to find a way to publicize some specific uses, practices and recommendations that enable the understanding of a world that is as fascinating as it is risky, if the necessary information to operate is not available.

It is important to understand that each of our crypto accounts has a public key and a private key. The public key is the one used to make transactions., is the address where to receive the cryptocurrencies. While the private one is the most important: with it (which only the user should have access to) transactions can be completed.

What impact does this have?

When cryptocurrencies are sent to an exchange or exchange, the private keys are held by the exchange in the virtual wallet. If the exchange goes down or gets hacked, our cryptos will go to the same fate.

Of course There are ways to avoid these types of situations. For example, having our cryptos in a soft/hot wallet on a cell phone or computer. These wallets, among which stand out Exodus Y Trusted Wallet, they are generally free.

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Another possibility is to have a hardware/cold wallet which, although they have a cost, is more secure since the private keys are in the possession of the user and only he can approve a transaction.

The best recommendation that can be given to take firm steps, and forward, is that, when making investments a long term, are carried out in this type of soft or hardware wallet.

And only leave in the exchanges those currencies that are used to operate daily. Because, ultimately, in the crypto world there is a typical phrase that says “not your keys not your cryptos” (Not your keys, not your cryptocurrencies).

* Engineering Business Architect