How to store crypto — hot and cold wallets
What you need to store crypto
For the steps below, prepare:
- a phone or computer that only you use;
- paper and a pen for the seed phrase;
- for a cold wallet, a hardware wallet bought from the manufacturer or its official reseller;
- unhurried time with no one else around, because nobody but you should see the seed phrase while you write it down.
How to store crypto step by step
Step 1. Decide where to keep your crypto
The place depends on the task. On an exchange, the keys to customers' crypto (the secret codes used to approve transfers) are held by the exchange itself1, so that is where people keep what they trade, and the rest goes to their own wallet.
| What you do with the crypto | Where it is usually kept |
|---|---|
| Trade it or sell it soon | exchange account |
| Pay and send it every week | hot wallet |
| Save it for months and years | cold wallet |
| Try new sites and apps | separate hot wallet |
How hot and cold wallets differ in protection, and at what amount it makes sense to move to a hardware wallet, is explained in the article hot vs cold crypto wallet. A separate wallet for unfamiliar sites is there so that a scam site, once it gets your approval in the wallet, cannot drain your savings (safety when connecting a wallet).
Step 2. Install the wallet from an official source
A wallet app is installed from your phone's app store or from the developer's website, typed in by you. Fake versions of wallets look convincing, so take app links only from the official website2. Before the first setup, a hardware wallet is inspected for the signs listed in the article hot vs cold crypto wallet.
In the app or on the device, choose to create a new wallet. The "Restore" or "Import" option is only for when you already have a seed phrase.
Step 3. Write down the seed phrase
The new wallet will show you a seed phrase and ask you to write it down.
- Copy the words by hand, in order and with numbers.
- Check each word against the screen: every word must be spelled correctly and stand in the same order3.
- Put the record in a safe place that only you can reach and that you will not forget4.
A photo, a screenshot, a note on your phone or cloud storage will not do for the record, and do not make digital copies at all3. How many copies to make, and when a metal plate is more reliable than paper, is covered in the article what is a seed phrase.
Step 4. Check that the wallet can be restored from the record
The record is checked while the wallet is still empty, when a mistake in it costs nothing. In the same way, you try a spare door key while the door is still open: if it does not fit, you find out before the door slams shut. Some hardware wallets have a built-in check. On Trezor it is called Check backup: you enter the words on the device, and it tells you whether they match the wallet's seed phrase5.
With a wallet app, you check by restoring:
- Copy the receiving address of the new wallet into your notes, that is, the number of your "account" that people send crypto to. The address is not a secret and can be stored anywhere.
- Delete the wallet from the app.
- Restore it from your record, on the same device or a different one4. The steps are in the article what is a seed phrase.
- Compare the address with the one you saved.
If the address matches, the record is correct. If the wallet rejected the phrase or showed a different address, create a new wallet and write down its phrase again, more slowly.
Step 5. Move your crypto from the exchange to your own wallet
- In the wallet, open the receiving address for the crypto you need on the network you need, the network being the system the transfer will travel through.
- With a hardware wallet, show this address on the device's screen and compare it with the address in the app6.
- On the exchange, open the withdrawal form, paste the address and choose the same network as in the wallet. The exchange shows the withdrawal fee before you confirm. where to check: the exchange's withdrawal form
- Send a small amount first and wait until it appears in the wallet.
- If the test transfer arrived, send the rest. If it did not, send nothing more until you have sorted out the address and the network.
How to choose a network, when a memo is needed and what to do after a mistake are covered in the guide how to send crypto. To send USDT from your own wallet later, you will usually need a little of the network coin in it, such as TRX on Tron or ETH on Ethereum, because the network charges for a transfer in its own coin. Put some there in advance. Certain methods and apps help lower the fee or pay it in USDT itself; the article on network fees goes through them.
Step 6. Split your crypto into spending and savings
If you have a hot and a cold wallet, each must have its own seed phrase. The article hot vs cold crypto wallet explains why one phrase is not used for both. Keep on the hot wallet as much as you are ready to lose along with your phone, and shift the rest to the cold wallet as it builds up. Label the records of the two seed phrases so as not to mix up the wallets, and store them apart from the devices.
If you lost access to your wallet
The crypto itself is recorded in the blockchain, the shared record of every transfer on a network, while the wallet holds only the keys that control it7. So losing a phone or a device does not yet mean losing the crypto, as long as the seed phrase is written down.
What should I do if I lost the phone with my crypto wallet?
- Install the wallet on a new phone from an official source.
- Restore it from your written seed phrase4.
- If a stranger could unlock the lost phone and open the wallet, create another wallet with a new seed phrase and move all your crypto there.
Other cases of lost access
- If a hardware wallet breaks or goes missing, access to the crypto is restored from the seed phrase on another device8. The article hot vs cold crypto wallet lists what to keep in view while doing so.
- If the record of the seed phrase is gone but the wallet still opens, or if someone has seen the phrase, create a new wallet right away, write down its phrase and move your crypto there. With no record and no working wallet, access is lost forever9. The transfer procedure is described in the article what is a seed phrase.
Risks of storing crypto
When you store crypto yourself, you are responsible for keeping it safe. If the wallet is lost, stolen, damaged or hacked, you may lose access to the crypto for good1. That is why writing down the seed phrase and checking it matter more than which wallet you pick.
What happens to my crypto if the exchange goes bankrupt?
No one can say in advance: customers' rights in a bankruptcy depend on the exchange's user agreement and the laws of the country where it operates ⚖️. When an exchange goes bankrupt, a customer may lose access to their crypto1 ⚖️. So leave there only what you are using now. For the other risks of keeping crypto on an exchange, see what is a private key.
