Cryptocurrency does not operate like a bank account. When access to coins is lost, there is typically no help desk able to restore it, which makes storage one of the first decisions every owner has to make.

A data-driven look at crypto storage — covering losses, wallet types, costs, user priorities, and the habits that reduce risk — draws on five published guides from Investopedia, The Motley Fool, BitPay, and Changelly, listed at the end of this article.

The sources converge on a single point: a hardware wallet under the owner's direct control is the safest widely available option. The sections below explain why, and where alternative choices still make sense.

How Much Crypto Is Lost or Stolen

BitPay estimates that $2.2 billion in cryptocurrency was stolen in 2024. That figure excludes coins lost to user error in earlier years, as well as the exchange failures of 2022.

Theft is only one route to loss. BitPay identifies four common causes: hacks, scams, user error, and exchange failures. Investopedia adds computer failure and lost access keys to that list.

Loss may be a larger problem than many owners realize. Unchained, as cited by The Motley Fool, estimates that 3 million to 3.8 million Bitcoin have been lost forever — coins that no one can reach anymore.

The value tied up in those coins is substantial. At $80,701 per Bitcoin, the price displayed on The Motley Fool page, 3 million coins amount to roughly $242 billion, while 3.8 million coins total about $307 billion. Because prices change daily, these totals serve only as a guide to scale. They suggest that lost coins may be worth far more than the amount stolen in a single year, though the two figures measure different things and should not be added together.

The blockchain itself is not the weak point. According to Investopedia, there are no known cases of cryptocurrency stolen by altering blockchain records, and breaking the encryption by brute force would take centuries, if not millennia, with current technology.

The weak link sits between the blockchain and the user. Wallets hold the private key, and most wallets are software running on a device that can be hacked — which is why storage choices matter.

Crypto use is also growing in lower and middle-income countries. Investopedia says people there use crypto to invest, send money home, keep savings, and replace financial services that are missing or hard to reach. Hacks and thefts have grown alongside that adoption.

Owners frequently lose coins through simple mistakes. Investopedia lists thieves, computer failure, and lost access keys as the main routes of loss. Ownership is recorded on the blockchain, but access depends on a key that one person must keep safe.

Understanding the Types of Crypto Wallets

Crypto wallets are classified along two dimensions. The first is custody: who holds the private keys. The second is connection: whether the wallet is online or offline.

In a custodial wallet, a third party such as an exchange holds the keys on the user's behalf. In a self-custody wallet, also called non-custodial, the user holds them directly. BitPay notes that self-custody means full ownership of the keys.

Hot wallets keep funds online, where they are easy to reach. Cold wallets keep funds offline, away from hackers; a cold wallet can be brought online briefly to complete a transaction.

Every wallet has a public key and a private key. The public key functions as the wallet address. The private key grants access to the coins, making it the item that must be protected.

Exchange wallets are the default for many buyers. When crypto is purchased on an exchange, the funds go to a wallet the exchange controls — what BitPay calls a custodial hot wallet. Motley Fool points out that some brokers and apps allow buying and selling only, in which case coins cannot be moved to a personal wallet and the custodial wallet is the only choice.

Hardware wallets are small devices that keep keys offline. Transactions are signed on the device, which is separate from the user's computer. According to The Motley Fool, some models hold more than 1,000 coins, while others support only Bitcoin and a few more.

Mobile and desktop wallets are applications that are usually self-custody and hot. Paper wallets are printouts of keys, and BitPay notes they were the only cold option before hardware wallets existed.

Investopedia lists four wallet types: desktop, mobile, hardware, and web-based. Other guides add exchange wallets, paper wallets, and multisignature wallets. The labels differ, but the underlying custody and connection questions remain the same.

Web-based wallets are a special case. Investopedia considers them insecure because a web service stores the keys on the user's behalf — and anything that stores or enters keys for a user can be hacked, according to the same source.

What Crypto Storage Costs

Most storage options are free. The Motley Fool lists custodial, hot, and paper wallets at no cost, while Investopedia notes that exchanges may charge small fees for buying, selling, or sending crypto.

Hardware wallets are the main paid option. The Motley Fool puts the average cost at $50 to $250, adding that several highly reviewed models sell for $50 to $500. BitPay cites an average of about $100, and Changelly says Ledger and Trezor devices typically cost around $100. Investopedia says one may be obtainable for a few hundred dollars and argues the expense can be justified when the coins being protected are worth far more. The device price is small next to the value at risk.

One way to illustrate the gap: a $100 device equals roughly 0.12% of the $80,701 price of a single Bitcoin, based on the figure shown on The Motley Fool page.

Cost is not only about money. The Motley Fool lists the price and inconvenience of a device as the main drawbacks of cold wallets. Paper wallets are free, but their cost appears as risk of loss and user error. Hot wallets are almost always free and fast to use; the price paid is online exposure. The Motley Fool says the odds of a hack are low, yet it is not a risk worth taking with large amounts.

Insurance is another factor with custodial wallets. Investopedia says some custodians insure holdings up to a certain amount, and exchanges have moved user keys into enterprise-level secure storage to harden their services.

What Users Look for in a Wallet

A Changelly survey conducted in 2025 on wallet choices found that over 52% of users put strong asset protection and full control first, though the source does not disclose how many people were surveyed. Convenience and ease of use still matter, according to the same report, which says users pick a method based on how much security they need, how often they transact, and how much control they want.

BitPay frames the decision as three questions: How much have you invested? How often will you spend or send crypto? How technical are you? The answers shape the best setup — a larger balance calls for tighter security, while frequent spending pushes people toward easier access for part of their funds.

Skill level counts as well. BitPay says less technical users may choose less secure options because the risk of user error with advanced tools could be higher; a simple tool used well can outperform a strong tool used badly.

Investopedia offers its own list of factors: security, fees, supported coins, custody, and customer service. A user who trades many coins needs an exchange that supports more than Bitcoin and Ethereum. Custody matters most to beginners who worry about passwords — Investopedia says custodial services can keep crypto and help recover a forgotten password, though that help comes with less control.

Exchange choice also depends on rules. Investopedia says many platforms ask for identity checks, known as KYC, which may include a name, date of birth, email, phone number, home address, and a government ID.

Comparing Security and Convenience

Every storage method trades security for convenience, and no method is completely safe, according to Investopedia. The right pick depends on what a user can accept.

Cold hardware wallets sit at the secure end. The Motley Fool says offline storage is widely seen as the best option for security, and many platforms use it to protect most of their own crypto. The price of that security is speed: the device must be connected to move coins, which makes the process slower. Changelly adds that setup may confuse beginners. Cold wallets can also be lost — Investopedia warns that devices can be misplaced or stolen, and water or fire damage can end access if no seed phrase backup exists. Investopedia also notes that a cold wallet cannot be hacked while it is not connected to a device; once connected, it becomes open to risk, with the weak points being the software and the device it plugs into.

Hot wallets sit at the easy end. They are free and quick, and users control their own keys when the wallet is self-custodial. The drawback is that malware or unauthorized access on the device can lead to lost funds.

Exchange wallets are the simplest. They provide access to many assets and suit trading, at the cost of limited control over private keys and exposure to exchange hacks and technical problems.

Paper wallets are free and offline, but easy to damage, lose, or steal. Investopedia notes that anyone who obtains the paper can reach the keys, and copies carry the same risk.

Sources disagree on USB drives. Investopedia says an encrypted USB drive can work as cold storage if handled with care, while Changelly calls it risky, because plugging it into a computer exposes the keys to spyware.

Wireless options add one more choice. Investopedia says Bluetooth models are relatively safe if the connection is off after use. Some devices also advertise support for DeFi applications, and Investopedia notes that DeFi protocols have been behind many hacking incidents.

Security Habits That Lower Risk

Good habits matter as much as the wallet itself, and several sources list the same core steps — most of which cost nothing.

Back up early and often. Investopedia says regular backups may be the only way to recover coins after a computer failure, and recommends storing copies in more than one secure place, protected by a strong password and encryption.

Keep software up to date. Wallets running old software can be easy targets; updates add fixes that raise safety.

Guard the seed phrase. It is a list of random words that works like a master password. Investopedia shows a 24-word example and says words are easier to store than a 64-digit hexadecimal key. The phrase should be written down and kept somewhere only the owner can reach; steel stamping kits exist to protect it from fire and water. The Motley Fool says never share it, and never save it on a computer.

Check every address before sending. Changelly warns that a transfer to a wrong address cannot be reversed, and also advises two-factor authentication and strong.

Keep only trading amounts on exchanges. Changelly says exchanges are open to hacks, so the remainder should sit in a personal wallet. Wallet software should be used only from trusted sources to avoid malware and phishing.

Multisignature, or multisig, wallets add another layer. A transaction needs approval from several keys before it goes through; in a 2-of-3 setup, any two of three keys can approve a transfer. BitPay says keys can be placed in different locations, making it much harder for an attacker to reach the funds. Investopedia says groups of three to five approvers are common and urges users to trust the other members.

Check the provider before opening an account. Investopedia says to confirm that a platform is available in the user's area and to find out who runs it, and suggests looking for a history of security incidents or regulatory actions.

Visibility is another risk. A hot wallet's address and balance can be seen by anyone on a blockchain explorer. Investopedia says large balances attract thieves — an empty wallet has nothing to steal.

Choosing a Setup That Fits Your Use

No single setup fits everyone, but the sources agree on the broad pattern: match the wallet to the size of holdings and how often funds are spent.

Small holdings can sit in an exchange wallet, says BitPay, though it is less secure. BitPay adds that any self-custody wallet can be just as easy to use and safer, since keys stay with the user rather than a third party.

Large holdings call for cold storage. BitPay and The Motley Fool both suggest keeping most funds in a hardware wallet, with a small balance in a hot wallet for fast use.

Experienced users often run several wallets. BitPay gives one example: a hardware wallet for long-term storage, a mobile self-custody wallet for spending, and an exchange wallet for niche coins.

Care is needed when spending from cold storage. Investopedia advises moving only the amount planned for use into a hot wallet, then returning what is left to cold storage when finished.

Changelly puts it in short terms, naming a hardware wallet such as Ledger or Trezor as the safest overall choice — as long as the device that stores the keys is not lost. Investopedia says a cold wallet can be worth the price for many owners: the device may cost a few hundred dollars, while the coins it protects may be worth far more. Still, cold wallets can be lost, so they should be kept in the same safe place each time.

The Bottom Line

The numbers point in one direction. Theft reached an estimated $2.2 billion in 2024, and millions of coins are lost for good. Self-custody cold storage is the most trusted defense, at a typical cost of $50 to $250. It is not perfect, since devices can be lost and must connect to be used, and a split setup balances safety and ease for most people.

This article is for information only and is not financial advice.

Sources

• Bitcoin Storage: Top Safe Methods to Protect Your Cryptocurrency (Investopedia)
• How to Safely Store Cryptocurrency (The Motley Fool)
• The Best, Safest Ways to Store Your Cryptocurrency: What You Need to Know (BitPay)
• The Safest Way to Store Cryptocurrency in 2025 (Changelly)
• Secure Ways To Store Cryptocurrency: Hot, Cold, and Paper Wallets Explained (Investopedia)

Originally published on Blockonomi: What Is the Safest Way to Store Cryptocurrency?