Best place to store your Bitcoin
Since the transaction cost is getting very high, many people might wonder what would be the best place to store your Bitcoin. This question has only one answer that is - a Bitcoin wallet. Storing Bitcoin on exchanges is not a good practice unless the quantity is very low or you are ready to lose the funds. There is a huge risk in holding crypto on exchanges, but if there is a purpose for holding it on exchanges, it should be fine. Because it is only for temporary reasons, it is fine.
Bitcoin wallet
This is the best place to store your Bitcoin. The only problem we have with a Bitcoin wallet is that we will not be able to move the funds from one wallet to another wallet more frequently. If we have to do that, we have to pay transaction fees and the transaction can also take a considerable amount of time to get cleared. This has given another challenge for the trader. It is not easy to move micro amounts from one wallet to another wallet, the transaction fees can sometimes be more than the value of the transfer. It may not be wise to move funds from wallet to wallet.
There are also cold storage options available that become a convenient option. People who wish to not touch their Bitcoin and hold them for a very long time might use this option. They keep accumulating Bitcoin in that wallet wanting to hold them for several years. Some people even have the plan to hold them for decades. For these people, it is just an investment and people don't care about the transaction fees or transaction speed. These people also hold a large quantity and the best place to store their Bitcoin is a private wallet.
Exchanges
Transaction fees and transaction speed are some of the reasons why people prefer to have their coins on exchanges instead of wallets. This is the next and the most convenient option to store our Bitcoin. The biggest problem here is that we might sometimes lose our funds if the exchange is hacked or if the exchange is not maintained properly. Some people are okay to take this risk because it is more comfortable to do the trading on exchanges than doing it from wallet to wallet. There are some advantages to having Bitcoin on exchanges than wallets.
Exchange wallets might look like our wallets but ultimately we are using someone else's wallets to hold the funds and transact those funds. This is why it is not safe and we cannot stick to them for so long.
KYC free option
Some people prefer storing their Bitcoin in wallets instead of exchanges to avoid KYC. Most exchanges have now started asking for a KYC from the users. Having crypto in wallets is private and secure and nobody will know about it. If people create a wallet and move the funds from one exchange to another and from there to a private wallet, nobody can find out who is holding the funds. Having a KYC-free option like this is attractive for many people and there should already be many people who are doing this already.
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You've touched on a crucial aspect of the crypto world that often gets overlooked by newcomers: the importance of secure storage for Bitcoin and other cryptocurrencies. It's a valuable reminder that, while exchanges offer convenience and liquidity, they come with their own set of risks, especially concerning security breaches and the potential loss of funds. The distinction you made between hot wallets (exchanges) and cold storage options highlights a fundamental strategy for long-term holders: minimizing exposure to risks by utilizing private wallets for significant holdings. Your insights also shed light on the transaction cost dilemma, which indeed poses a challenge for frequent traders or small transfers. It's a fine balance between accessibility and security, and your breakdown really helps in understanding the trade-offs involved. Plus, pointing out the KYC-free appeal of private wallets offers a crucial perspective for those valuing privacy above all. Thanks for sharing such a comprehensive overview!
Thanks for your valuable comment.
Cheers!
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I would love to hear about names of wallets if you have any experience in either of the options mentioned above.
One of the reasons for not holding Bitcoin for me is not knowing where to store it.
Do you know good Bitcoin Wallets, cold storages or KYC free wallets.
I use Token Pocket mobile app that helps me handle my wallets. Bitcoin.com mobile app is also a good one to store BTC and BCH. You can create a wallet using these apps and keep the seed phrase safe to reuse the same on multiple apps.
Well, I feel it is better to always put in our KYC registration but making sure that it is on a trusted exchange
It will be better that way
I don't know why you think it is better but many people think that it is not a good idea to put KYC.
Self-custody is recommended but we need to be sure that we are keeping the key secure and accessible for us because if we lose the access to key then our funds are gone. At the same time keeping funds in an exchange wallet is risky but there is a possibility to regain access with some verification.
Yeah no point in locking a door with lots of money and throwing losing the key. 😉 We have to be careful with the keys.
Thank you for this tip. It is really necessary that we learn the right medium for us to keep our bitcoin as this present time