Q: I’m just getting started with cryptocurrency and trying to figure out where is the best place to store it.

A: Cryptocurrencies, such as Bitcoin and Ethereum, are digital assets that are commonly bought, sold, traded, and stored in some form of digital wallet.

Cryptocurrencies use encryption for security and transaction execution, and are controlled by private keys associated with them.

These “keys” are actually what is stored in your wallet, allowing you to determine what is happening with these assets.

If these keys are lost or stolen, your ability to do anything with your cryptocurrency is at risk, so it’s important to understand the pros and cons of the different options.

Typically, you can store them on hardware you own or online via what’s called a custodial wallet.

Custodian wallets are where your crypto keys are held by a third party (the custodian), usually associated with an exchange so they can execute transactions for you.

For those just starting out, the custodial wallet approach, via popular exchanges such as Coinbase and Crypto.com, usually makes a lot of sense.

Storing your own keys on a device that is not connected to the internet (a/k/aa “cold wallet”) is certainly safer; but for those just starting out, it adds a lot of complexity. Many exchanges also store the majority of your stake in a cold wallet. If you are responsible for managing your own digital keys and you make a mistake, it can be disastrous.

My recommendation is to start with a very small amount of money – an amount you are willing to lose – with a user-friendly exchange that will manage your key storage, so you can start your journey into the world of cryptocurrency. without a huge learning curve.

As with most technology, the more secure it is, the less user-friendly it is; your ability to acquire knowledge is therefore the determining factor in your best course of action.

Choose an exchange

Much of choosing a cryptocurrency exchange will be based on what you plan to do. If you’re looking to buy and hold with an occasional transaction, the associated fees may not be that significant. But if you want to be an active trader, they become a vital consideration.

Another consideration will be what cryptocurrencies the exchange allows you to trade if you plan to go the active trader route.

If you are a new user, the application for the exchange may be an important consideration from a usability perspective. Take the time to check the app’s reviews to see if there are any recurring issues or complaints.

There are almost 400 cryptocurrency exchanges out there today, along with scam exchanges popping up regularly. So do your homework.

Make sure there is a physical address associated with the exchange that you can check for and examine how they secure your assets as they operate online.

An excellent article that provides details on some of the most popular exchanges is published on Time.com.

Ken Colburn is founder and CEO of Data Doctors Computer Services. Ask any technical question on Facebook or Twitter.

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