Crypto wallets: what you need to know

Cryptocurrency prices appear to be on an unstoppable upward trajectory. With Bitcoin and Ethereum hitting all-time highs again this month, more people are investing their money in digital currencies. And they have a host of options to keep their investments safe.

Cryptocurrencies are stored in what is called a wallet, which has an associated private key, similar to a password. The easiest way to store your coins in a wallet is on the cryptocurrency exchange that you used to buy your coin (think Coinbase or Gemini). But the more mainstream companies, like PayPal and Robin Hood, they have also added options to buy, sell and store cryptocurrencies.

James Martin / CNET

Cryptocurrency owners who want full control over their investments can also rely on software-managed digital wallets locally on the user’s own device. For an added layer of security, you might consider using what’s known as a cold wallet, which is essentially a local device like a hard drive that’s not connected to the internet.

Companies like Trezor and Ledger make special units specifically for cryptocurrency wallets. Companies say sensitive information is not exposed even when devices are connected to your computer (just don’t lose the device or the key needed to access the data on it). Watch the video above to see in depth how all these options work.

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