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Why bother with a local "PC" based Wallet?

When people ask me how I store my coins, I explain that I keep my high volume coins (meaning I may trade them) in my "Exchange" account, and I keep my buy-and-hold coins in either a PC based wallet or on my KeepKey.

A Keepkey is a USB hardware device that you plug in to your USB port to transfer to and from, and when not in use you store it in a safe place, such as a locked drawer or a home safe.  Keepkey is not the only hardware wallet out there.  In fact Ledger makes a very good wallet, but they are constantly sold out and the wait list is often months to get one.

The reason I store them the way I do is for security. I don't trust online wallets to keep my coins as safe as I can when I store them locally.  Just this week there was a hack of the ETC online wallet site "ClassicEtherWallet.com".  The hackers used social engineering to get control of the site and made off with user's coins.  You can Google for more info on that or see a summary here:

https://www.bleepingcomputer.com/news/security/classic-ether-wallet-hacked-users-report-massive-losses/

Why not always store in a PC Wallet?  Well, if you are going to trade the coins, that means you have to transfer the coins from you wallet, back to your exchange, wait for the transfer to be confirmed, do your trade, and then reverse the process.

Perhaps the bigger hassle is you need to keep PC based wallets in sync with the parent blockchain.  Sometimes those blockchains are huge (like for ETH) and it can take days to sync a wallet for the first time.   I used to use a Mist based wallet to store my ETH (now my Keepkey supports it) and if I didn't use the wallet for 2-3 days, it could take an hour or more for it to pull in all the recent transactions to get the blockchain in sync.

Synchronizing the blockchain also means you have to have enough free drive space to store the blockchain.  In the case of ETH, that is currently about 82Gb in hard drive space which isn't insignificant.

The problem with just leaving them all at the Exchange you use to do your trading is basically the same as storing them in an online wallet.  The Exchange could get hacked, or it could go out of business, or both, as in the infamous case of Mt. Gox.  When Mt. Gox got hacked, the hacker(s) made off with over 800,000 bitcoins.  That's over a half a billion dollars. Mt. Gox had no way to cover those losses, so they went belly-up.

On the flip-side, if you do store your coins locally or on a hardware device, then the security is totally up to you.  If you store them on your laptop and it gets stolen, you are no better off.  Or, if you forget your password / pass phrases, you are equally damaged.

That being said, keep in mind that most if not all wallets can be recreated from the private key.  So if there is one thing you want to take care of, it is the private key to each wallet you use.  Very often those private keys are created by you entering a long set of words when you create the wallet.  My advice to you is, the very first thing you do after creating your wallet is to write down those words on a piece of paper (and/or put them on a thumb drive) and store THAT in your safe.  That way even if your hard drive crashes or your laptop is stolen, you can recreate the wallet and recover your coins.

(image credit: www.nordic-vikings.net)

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