A Certified Financial Fiduciary in New Jersey, Robert M. Ryerson has been working in the finance industry for more than 30 years. Also an expert in cryptocurrencies, Robert M. Ryerson teaches the subject to help audiences learn about using blockchain technology.
Since cryptocurrency exists solely in the digital world, it must be stored digitally with a digital wallet. This wallet allows individuals to send, receive, and store cryptocurrency.
However, a digital wallet does not store the currency itself like a traditional wallet does. Instead, digital wallets save the private and public keys that are needed to send and receive cryptocurrency.
Digital wallets generally function like vending machines. People can put cryptocurrency into them, but they cannot remove the cryptocurrency.
The cryptocurrency can be removed only by the person who has the key to the wallet. For this reason, only wallet owners have access to the private key needed to access the currency in the wallet. If the key is ever lost, access to and control over the cryptocurrency in a wallet is also lost.
To protect their keys, crypto traders often use “hot” and “cold” storage techniques. Hot storage means a key is saved in a device connected to the Internet.
Cold storage keeps keys completely offline, making them more secure. People who plan to store their cryptocurrency for a long period should use cold storage to protect their keys.
