So you’ve worked hard and bought your first Bitcoin, now what?

As you sit there and wait till Bitcoin hits your $1 million target before you go off galloping into the Bahamas sunset, you need to ask yourself what you want to do with it in the meantime.

Do you intend to actively trade it? How about flexing with a vanity domain name or some NFTs?

The fun and possibilities are as they say, endless.

BUT FIRST! You need keep your funds safe. After all, crypto IS money. And if I were you, I’d be looking at ways to keep it safe away from prying eyes and thieving hands (and there are MANY thieving hands in the world of crypto).

Here’s an example of how to organize your funds:

Exchange Custody Wallets

“Why can’t I just leave my coins in the exchange” I hear you ask. Well my young Padawan, it’s because you don’t actually OWN your coins if you keep it in the exchange. The exchange could shut down, get hacked, or you could face a delay in getting your funds back.

You might think that a slight delay is nothing, but in the world of crypto things move fast. And when you’re thinking of selling your crypto at an all time high and can’t access your funds, you might be thinking differently.

Exchanges can suspend your withdrawals at a moment’s notice

The funds that you keep in the exchange are in a custody “wallet”. Technically they are not a real wallet because you don’t own the private keys to them. You can read more about it here, but simply put, the exchange is merely safekeeping it for you until you need it again.

And hopefully that happens before it gets shut down or hacked.

Keep funds that you are actively trading here, but that’s about it. An exchange should not be the only storage for your funds.

Hardware Wallets aka Cold Wallets

If you’ve done some prior research before buying your first crypto, you’ve probably heard about Ledger or Trezor (Say what? You haven’t done any research?). These wallets are basically USB devices which store your coins offline, so it’s harder for them to be hacked. If you’re a HODLer, keep them here and go hibernate. I’ll wake you up in 2035 when Bitcoin is at $1 million.

This is one of the safest ways to store your funds at a retail level, but I gotta admit, it’s slightly more cumbersome. But hey, what’s a couple more minutes for peace of mind right?

Software Wallets aka Hot Wallets

Ahhh, this is where the space gets interesting. Software wallets used to be just that – a software version of the hard wallet, but stored in a programme (instead of a USB drive). They’re called hot wallets because they’re meant for activity in the crypto space (which makes them more accessible than cold storage options).

These days software wallets come with added functionality. A good example is the Trust Wallet by Binance. It’s F-R-E-E and has all kinds of fancy decentalized apps (DApps ) that you can access.

What’s the catch with it being free? Well, Binance is a champion in the crypto space and it’s no wonder they are trying to get the community to grow. They are one of the biggest crypto exchanges around, so more adoption means more potential business for them.

Look at all these fancy DApps!

With this wallet, you can then create as many additional accounts or addresses as you want (ie. secondary wallets), for staking and purchases. The reason you do not keep your entire stack in one place is because you don’t want to give any one particular site or platform access to your entire vault.

It’s basically the same reason you don’t carry your entire bank account with you in the fiat world when you go out. You carry a physical wallet, just enough to pay for a couple of rounds with your friends (or maybe just enough for yourself you selfish bastard).

Do I really NEED a cold wallet AND a hot wallet?

Weeell not really, again it depends on how much of you have put into crypto and what you want to do with it. But at the very least, get a hot wallet, it’s free and easy to set up. If you’re active at level 2, try to layer your funds so you keep them separate for different purposes.

You could also use your cold wallet for level 2 activities, but it’s slightly more troublesome as you would need to physically connect your USB device each time you want to access your funds.

Also, remember the usual biometric/ numeric password for software access to your phone. They are not truly hacker proof but they provide some form of comfort in case you lose your phone so that you can get redivert your funds.

“Not your keys, not your coins.”

That’s generally the mantra that most crypto veterans live by. And never ever share your private key or seed phrase with anyone (you only truly own your funds if you store them in a wallet with a private key).

You are responsible for your own funds now, and there’s no recourse if you transfer them by mistake, lose your keys or get hacked. Unfortunately the crypto space is grown up and scary like that. But hey, who said making money was easy right?

P.S. Nothing in this post is to be considered legal or financial advice. All of the writing here is meant for information and entertainment purposes, so DYOR and make decisions based on your own beliefs.

P.P.S. If you enjoyed this piece, share the love with someone using the links below!