Nigeria’s growing crypto adoption stems from digital inclusion needs, economic uncertainties, and a desire for alternative investments. Nigerians see crypto as a path to financial empowerment, with its decentralised and borderless nature enabling transactions, investments, and wealth storage. It also bypasses traditional banking and high remittance fees, making it attractive for cross-border transfers.
But where to store this crypto?
That’s a crucial question for crypto users. Keeping your crypto safe is crucial. Let’s look at several ways to safely store, accumulate and receive passive income from your crypto assets. Each of these methods has its own advantages and features, which we will consider in this article.
Hardware wallet
A hardware wallet such as Ledzer or Trezor offers significant advantages over standard software wallets. Firstly, the private keys are typically stored in a protected area of a microcontroller, preventing them from being transferred out of the device in plaintext. This provides a robust defense against computer viruses that commonly target software wallets to steal funds.
Additionally, hardware wallets enable secure and interactive use, ensuring that private keys never come into contact with potentially vulnerable software. Furthermore, much of the time, the software within these devices is open source, allowing users to verify and validate the entire operation of the wallet, thus ensuring greater transparency and security.
Software and mobile wallets
These are software wallets like Guarda or Exodus that can be downloaded to your desktop or mobile device. They offer convenient online access for easy sending and receiving of crypto on a daily basis. However, as they are connected to the internet, they may be more vulnerable to hacking attempts compared to offline storage solutions.
On a crypto exchange’s account
Another method for storing cryptocurrency is directly on a crypto exchange’s account. Many popular platforms offer integrated wallets within user accounts, simplifying the process of buying, selling, and holding crypto. This convenience comes at the cost of reduced control over your assets.
Exchange wallets
Exchange wallets offer a user-friendly experience for managing your crypto. Deposits, withdrawals, and trading can all be done seamlessly within the platform. However, it’s important to understand the inherent risks involved. When you store crypto on an exchange, you don’t hold the private keys. This means the exchange controls your assets, and in the unfortunate event of a hacking incident or exchange insolvency, your funds could be at risk.
Risks and security measures
While storing them on an exchange is highly convenient, it does come with certain risks, such as potential hacking incidents or exchange insolvency. o mitigate these risks, it’s crucial to choose reputable crypto exchanges with a strong track record of security. Look for exchanges that employ robust security measures like:
- Multi-factor authentication (MFA).
- Cold storage for a majority of user funds.
- Comprehensive insurance policies.
Additionally, for larger holdings, it’s advisable to consider transferring your crypto to a personal wallet for an extra layer of security.
On crypto exchanges
Crypto exchanges offer more than just buying and selling cryptocurrencies. Many platforms now allow users to explore passive income opportunities.
Earning passive income
The concept of passive income has become increasingly attractive. Cryptocurrency offers a unique opportunity to explore additional income streams that don’t require active trading. Several platforms now provide Earn programs that reward users for holding their crypto assets. These programs typically offer monthly returns based on factors like:
- Amount of crypto locked in. The more crypto you commit to the program, the higher the potential return.
- Duration of the program. Locking your crypto for a longer period often leads to better returns.
- Diversity of your portfolio. Some programs might offer bonuses for holding a variety of cryptocurrencies or higher rates for holding an exchange token like EXMO Coin (EXM) on your balance.
Staking, lending and savings options
Crypto exchanges offer a variety of “earn” programs that cater to different risk tolerances and investment goals. Here’s a closer look at three popular options:
- Staking. Suited for users comfortable with locking up their crypto for a set period. By participating in Proof-of-Stake blockchains, stakers contribute to network security and earn rewards in the form of new tokens.
- Lending. Ideal for users seeking regular interest income on their crypto holdings. Lending platforms connect lenders with borrowers, allowing users to earn interest without actively trading.
- Savings accounts. A good option for users who want to earn a return on their crypto without committing to a lock-up period. Similar to traditional savings accounts, crypto savings accounts offer a lower interest rate but provide more flexibility.
Security of storage options
A hardware wallet, as illustrated by renowned brands such as Ledger or Trezor, stands out as the premier option for securely safeguarding cryptocurrencies. These devices store private keys offline, effectively protecting them from security breaches and malicious software, thus offering a higher level of protection compared to software wallets or exchange platforms.
Advantages of taking part in earning programs
When managing your crypto, consider exploring the earn programs offered by exchanges rather than withdrawing your deposited funds immediately.
How Earn programs work
Earnings programs are distinct from bank deposits. By joining this, you temporarily lock your crypto assets on the exchange. The rewards you receive depend on the amount of funds you deposit, the duration of your commitment, and the diversity of coins in your portfolio.
Benefits of earning programs
Participating in Earn programs not only offers a way to grow your assets without active trading but also supports the liquidity of the exchange. Increased liquidity facilitates more transactions on the platform, benefiting the entire ecosystem.
Why choose Earn programs?
Earn programs are designed to provide financial benefits without the risks associated with traditional banking deposits. While a bank deposit typically offers a fixed interest rate, earn programs provide variable rewards that can potentially be more lucrative.
Disclaimer. Investing in crypto carries risks. Prices can fluctuate widely, and it’s essential to invest only what you can afford to lose. Conduct thorough research and consider your financial situation before investing.
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