Chapter 10: Crypto
Investing in crypto can be a highly speculative practice, with a whole lot of big winners and losers. However, if you believe in the future of blockchain technology, it’s not a horrible idea to have some crypto in your portfolio. Bitcoin as a store of value has gotten extremely popular lately with institutional investors, and even some governments. That being said, a robust crypto investing strategy is enough content for its own course, so we’re going to keep it brief. The big thing to keep in mind when investing in crypto, outside of what you’re investing in, is how you’re doing the investing.
When dealing with cryptocurrency, storage matters. An exchange is a platform where you can buy, sell, and sometimes store crypto—but keeping funds on an exchange exposes you to potential hacks or the exchange going bankrupt.
A hot wallet is software connected to the internet (like mobile or desktop apps) that allows for convenient access and transfers. While convenient, hot wallets are more vulnerable to cyber threats.
A cold wallet (hardware or paper wallet) stores your crypto offline and offers the highest level of security. However, they’re less convenient for frequent transactions. For long-term storage, especially of large sums, cold wallets are the safer option.