Option #2: Personal Storage
Personal wallets give you full control of your assets, but managing one requires you to take sole responsibility for the security of your keys. Maintaining personal storage with no support or backup can be stressful and physical hard drives are liable to damage.
‌All personal wallets suffer from the same problem as exchanges: a single point of failure. If a key is lost or stolen, everything is lost with it. There are ways to protect against loss. A phrase known as a ‘seed’ allows a user to recover their lost key. But this in itself can be a point of failure and subject to theft. If your backup phrase is stolen or lost, you lose your assets.
‌Managing your cryptocurrency yourself means you are in charge of your security. You are responsible for keeping software updated, staying up to speed with the latest news and warnings, and constantly confirming that you are following best practices. It’s difficult, stressful, and not sustainable!
‌Hardware wallets store keys offline in or on a physical device. They are generally considered more secure than software wallets. However, they are still vulnerable to a single point of failure. What happens if your hardware wallet is destroyed or stolen?
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