The two options differ and there are advantages and disadvantages to each. Perhaps the most notable difference is in the fees encountered when you want to store your XRP at your own wallet address, instead of at a crypto exchange address. This article sheds light on the two storage options available to XRP traders. It will familiarize you with the main aspects of secure and economical XRP storage.
XRP Storage Essentials
- Like other cryptocurrencies, XRP is stored in wallets (paper, software and hardware wallets).
- Booking a new XRP wallet address costs 20 XRP.
- This reserve requirement of 20 XRP can never be withdrawn from the wallet.
- The XRP reserve requirement can be avoided by storing your XRP at a crypto exchange, which stores your crypto at their wallet addresses.
Storing XRP in wallets
As is the case with other cryptocurrencies, XRP can be stored in a variety of different wallets. From plain paper wallets and software wallets – specifically desktop and mobile wallets – to hardware wallets in the form of flash drives. But since electronic wallets can be hacked, some see the paper wallet as a very secure way of storing crypto. This is, of course, provided that you keep your public and private keys tucked away in a safe place.
Practicality, however, can sometimes outweigh security. Thus, if you intend to trade XRP frequently, you might consider using a software or hardware wallet instead of a paper wallet. This is because paper wallets require you to transfer your public and private keys to a software wallet before any crypto trading can take place.
So far, it may seem as though XRP wallets are no different from other wallets. But there is a catch. Storage of XRP comes at a price. Unlike with other crypto wallets, a reserve requirement of 20 XRP is needed to book a new XRP wallet address. If you buy 100 XRP and add it to a new wallet, 20 XRP will be locked to obtain the address of the new wallet. This means that you will only ever be able to use 80 of the 100 XRP you have bought. So unless you have a really good motive for doing so, opening multiple XRP wallets might be a waste of XRP.
Storing XRP at a crypto exchange
There is a way of getting around the reserve requirement associated with cold storage of XRP. Instead of storing your XRP in an external wallet, you can also store it at a crypto exchange. Some exchange platforms open new wallet addresses to store their customers’ cryptocurrencies. Other exchanges do not. Bitstamp is one of them.
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Bitstamp stores their customers’ crypto at the exchange platform’s existing, main deposit addresses (mostly in cold storage). Thus, if you store your XRP with Bitstamp, you will avoid having to pay the 20 XRP reserve requirement yourself. The fee has already been covered by the exchange.
Thus, if you wish to embark on an XRP journey, look no further. Register your free Bitstamp account and start trading crypto today.