“He’s out … well, about $50,000.” I gaped at my friend, Lance.
We were sipping on cappuccinos in a tiny French bakery, catching up after being apart for a few years. And as we talked, he got me up to speed on how his brother was doing.
Apparently, his brother Jack had the foresight to buy a handful of bitcoins back in the day. I’m talking back in 2013, when bitcoin was around $20 or so.
For many of you tapped into the cryptocurrency market, you’ll understand why he’s sitting on a small fortune now.
Tens of thousands of dollars made in about five years. Sounds great, right?
Well, it would be … if he could access that money.
See, Jack used a paper wallet to hold those bitcoins, and unfortunately, he didn’t take proper precautions. He lost the private key information printed on that paper wallet … and well, there’s no way to find it again.
Why is that?
Well, one of the great things about cryptocurrencies is that they are decentralized — doing away with the middleman. That means you have more control over the asset … but also more responsibility. There’s no centralized agency that can get Jack that lost key the same way a website could if you lost your login information (which, let me tell you, I do often).
The Bitcoin Mistake
So those bitcoins are just sitting there, taunting him … maybe sticking out their tongues from the web. And he’s a Ph.D. student, so I know he could use that money to pay off some loans.
I’m frustrated just thinking about it.
That’s precisely why I wanted to give a quick look at the world of crypto and how to secure your assets. This is a growing market that investors are starting to jump into more and more. So I want you to be ready.
Because I, for one, don’t want to be sitting on a fortune I can’t use.
Anatomy of a Crypto Wallet
For those who many not know, a wallet is a software program that holds the private key that will let you access your bitcoins — or any other type of altcoin. It doesn’t technically “hold” your altcoins. It just allows you access to your bitcoin address, which is also known as your public key.
Some wallets have great software that actually make it look like they are holding your altcoins, but that’s not the case.
There are a whole host of different kinds of wallets out there, so let’s take a quick look at them:
- Desktop wallets — You can download these wallets and install the software directly on your computer, which allows you to control your key. You just have to back up this software every once in a while, so there’s a little more work — but you have greater security protocols.
However, just know that your wallet is at risk if your computer gets hacked or stumbles across a virus.
- Online wallets — These offer more convenience and user-friendly interfaces. Online wallets, such as Coinbase, can also be accessed through your iPhone, tablet, etc., whenever you want. Many are free! But your information is stored with a third party, so these are less secure.
- Mobile wallets — These are app-based wallets designed for your phone, and they have the added value of allowing you to pay for something in bitcoin, ether, etc., while shopping. Many wallets in the above categories offer mobile app versions. There’s just the added risk of losing your phone or getting hacked.
- Hardware wallets — These are tiny devices that will sporadically connect to the internet and make transactions. This makes them less susceptible to hacking, but they can be lost or stolen. (Many big crypto investors use these, but they store them in a safe-deposit box, etc.)
- Paper wallets — Finally, we get to the paper wallet. These are probably the easiest to use (and one of the cheapest). They are just what they are called — pieces of paper. And your public and private key info is printed on them, typically as a QR code. But they are also easily destroyed by water or fire. And of course, they are pretty easy to lose track of … as Jack did.
For the safest storage, hardware wallets and paper wallets are some of the best options. Just make sure you place that paper wallet somewhere safe! You don’t want to be Jack.
And also keep in mind that cold-storage options slow down your reaction time. You wouldn’t be able to get out of an altcoin quickly if you needed to.
Of course, there’s a lot more to this — and the cryptocurrency world — than I’ve revealed here. So if you’re looking for more information on cryptos, I suggest clicking here to watch our Crypto Profit Summit.
Crypto expert Ian King talks about the market, as well as a strategy that has pinpointed cryptos up as much as 627%, 2,320% and 2,738% in the last six months alone.
Catch you next week.
Managing Editor, Banyan Hill Publishing