Different Ways to Hold Cryptocurrencies

There are several ways to hold cryptocurrencies.

Centralized Exchanges (CEX)

The most popular and worst way to hold cryptocurrencies is by keeping them in centralized exchanges (Binance, FTX, Kraken, Coinbase).

This is the simplest method as it serves as an easy entry point into the crypto world when transferring fiat currencies (euros, dollars, yen, etc.) from your bank account.

However, it is also a risky approach as it requires trusting the exchange, and we have witnessed numerous exchange failures, starting with FTX.

"Not your keys, not your cryptos."

Wallets

It is also possible to hold your cryptocurrencies directly by having possession of the private keys (a series of simple words).

These private keys can be stored:

• in a browser extension (Metamask, Coinbase, etc.),

• on a piece of paper or engraved plate,

• in a mobile application (Metamask or Coinbase also provide this option),

• in a hardware wallet like a credit card-sized card or a USB key. Tangem is an excellent provider of such solutions.

Depending on the amount held, we recommend using an application (let's say below $1000 or more, depending on your risk tolerance).

Beyond that, a hardware wallet like Tangem is an excellent solution.

Online Wallets

Some application providers offer an integrated wallet solution.

These wallets have the advantage of allowing a conventional login with email and password or a social login (FB connect, Google connect, etc.), and everything is transparent for the user.

In this case, the solution provider uses technology that guarantees that you are the only one who has access to your cryptocurrencies without needing to handle the private keys.

This is an interesting intermediate solution to start with because it respects the rule of allowing the user to hold their cryptocurrencies and only them, while offering a simple experience.

At Sophie.fi, we offer the possibility to use extremely simple online wallets, and for experts, they can use their own wallet.