Updated: Jun 28, 2021
Question 3: Does it matter how the digital currency is stored?
There are two ways to store digital currency; non-segregated and segregated storage. Many do not understand the significance of the difference, nor do they ask. Maybe this information will inspire you to ask questions in the future. There are two ways the digital currency can be stored. The first way to store digital currency in a segregated hardware wallet (some refer to this as cold wallet storage) requires the custodian to purchase the hardware (Ledger Nano, Exodus, Electrum, etc.) and establish unique keys for each device and then obtain unique wallets for each type of digital currency per client. Cold storage is the method Preferred Trust Company uses for its clients. The second way to store digital currency is to utilize a third-party digital currency storage provider to maintain the digital currency through a web-based wallet (some refer to as a hot wallet). Both options have their own degree of risk associated. However, if you do enough research, there is one thing that all security professionals can agree on and that is that web-based wallets have a higher degree of security issues. Check out this article to get their opinions: 10 Ways to Keep Your Cryptocurrency Safe.
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