External Reserves
External reserves are a type of cryptocurrency reserve used to store funds in an external wallet. They allow users to keep their assets in a secure environment, away from the exchanges and other third-party services where they may be vulnerable to theft or hacking. This is especially important for large holders of digital currency who want to protect themselves against market volatility or sudden drops in value due to unexpected events such as policy changes, hard forks, etc. External reserves can also be used by businesses that need extra liquidity when it comes time for them make payments or accept payment from customers.
When creating an external reserve, you’ll first need access to a compatible wallet address which will act as your storage space. The most common wallets include Ledger Nano S (hardware), MyEtherWallet (web/mobile) and MetaMask (browser plugin). Once you have created the necessary accounts on these platforms, you can then transfer any amount of your chosen cryptocurrency into this new ‘reserve’ account using either direct transfers from exchanges or through peer-to-peer transactions with other people holding those coins. It is important that if considering transferring directly off exchange sites always double check addresses before sending out funds – mistakes made here could mean lost money!
When deciding how much should go into your external reserve there are several things which must be taken into consideration: available capital; risk appetite; expected return on investment; level of diversification desired and length of planned hold period among others factors specific individuals might consider pertinent when forming their own strategies around crypto investing decisions more generally speaking too e.g., taxation implications etc.. By taking all these considerations onboard one can work out what portion should form part one’s holdings within any given portfolio structure whether short-, medium-, longterm oriented et al..
Finally once happy with allocations formed remember regular maintenance checks would still required periodically i.e., order book watching & monitoring coin movements across markets so that informed decisions regarding sell orders placed / buy orders filled at optimal times possible: thus avoiding unnecessary losses whilst maximising returns over predetermined periods specified beforehand….
