Despite coming out in 2009, cryptocurrencies have yet to become a widely used exchange medium. Due to its technical nature, the common investor still finds it hard to use digital assets for everyday transactions.
One of the biggest challenges in using crypto is looking for a wallet to store it. With so many to choose from, it’s hard to know which one is reliable.
In this article, you will find helpful information to guide you in looking for a reliable wallet suited for your needs. To learn more, keep on reading.
What are crypto wallets?
Crypto wallets are known as high-tech storage used to store cryptocurrency using public and private keys. Additionally, crypto wallets allow you to send, receive, and spend your digital assets.
Types of crypto wallets
Hot and Cold are the two types of crypto wallets. Each one has its own features and benefits fitted to suit users’ needs. Learn more about them here:
Hot wallet
This is a software wallet that can be accessed across devices. It allows you to make transactions anywhere as long as there’s internet access. However, due to their online nature, hot wallets are susceptible to cyberattacks, especially if you’re using an unprotected browser. It’s ideal for users to store small amounts of funds if they’re using this type of wallet.
Below are some of the hot wallets you can use and where they’re accessible:
Mobile wallets – This type of wallet is accessed through your mobile device. Transactions are accomplished through a touch-to-pay system or QR codes. This is an ideal software for mobile traders and transactions.
Web wallets – Through desktop or laptop internet browsers, investors can manage their crypto investments using this type of wallet. This software is well suited for investors who trade for a living and want to access the full features of exchanges.
Exchange wallet – This type of wallet is built in the exchange you’re using. When storing tokens in a centralized crypto exchange wallet, it gives them access to your information, unlike that of a decentralized one.
Cold wallets
A cold wallet comes in the form of a hardware device used to store your cryptocurrencies offline. You need to plug the device into your computer in order to access your cryptos. This type of wallet is ideal for big investments because of its offline nature.
Though it may be less vulnerable to online attacks, it’s susceptible to either physical damage or being stolen. That’s why once you’re done, store the device in a well-guarded and safe space.
Below are forms of cold wallets and how to use them:
Hardware wallet – This wallet, usually in the form of a device like a USB allows you to access your cryptocurrencies by plugging it into your computer. Some brands you should consider using are Ledger, Trezor and KeepKey.
Paper wallet – The paper wallet is a type of storage that has your cryptocurrency address and your private key in the form of a QR code. You can use a crypto QR code generator such as bitaddress.org, then print your address and private key on a piece of paper to obtain this.
How to increase crypto wallet safety
Now that you know the different wallets you can use, here are some helpful tips to keep them safe:
Create a backup of your hot wallet
Computers or mobile devices aren’t always reliable since they can be stolen, hacked or destroyed. This is why you should always back up your wallet information to prevent losing all your hard-earned tokens. To do this, create duplicates of your wallet’s wallet.dat files and place them in multiple password-protected devices like a flash drive or hard drive.
Use known and trusted crypto wallet platforms
Before placing cryptocurrency tokens in a wallet, ensure that the storage you’re using is trusted and reliable. For hot wallets, use those curated by industry leaders like Binance, Coinbase, and Coinsmart.
For cold wallets, only purchase them from well-known brands. Do your research and check their level of security to ensure their reliability.
Update your wallet’s system
As criminals learn new hacking methods, crypto wallet providers create new security systems updates to combat them. That’s why you shouldn’t ignore the update notifications of your crypto wallet. Make sure to frequently install security updates to avoid losing all of your cryptocurrencies to hackers.
When you’re using web or hot wallets, make sure you use encrypted browsers for extra security.
Use a multi-signature lock system
This system is created when two or more people, called co-payers, share a wallet, then sign and agree to each other’s crypto transactions. However before you do this, make sure the person you share a multi-signature lock system with is someone you trust.
In the event that hackers got a hold of one of your keys, they won’t be able to access your wallet because it still needs approval from another person.
Use two-factor authentication
If you prefer to have sole access to your wallet, make sure to use two-factor authentication. Meaning, instead of just having your password protect your wallet, there is also an additional code that can be sent through email, text, etc.
Having two-factor authentication gives your wallet an additional layer of security, so make sure to implement it.
Hot vs. Cold wallets: Which is better?
Like everything else, the quality of these wallets depends on your risk tolerance, goals, and your cryptocurrency knowledge. Be aware of your personal preferences so that you can choose the best wallet suited to your activities.
To help you decide, here are things to remember:
- For long-term cryptocurrency storage, a cold wallet is an ideal option. Due to the offline nature of this wallet, they’re less susceptible to online attacks.
- If you frequently trade and make a lot of crypto-based transactions, a hot wallet is more suited for you since they offer more flexibility and accessibility to your assets.
- For cryptocurrency beginners, using the starter-friendly crypto exchange wallet ensures easy transactions.
In conclusion, follow the safety precautions described above and familiarize yourself with the different wallets by doing your own research to ensure a safe crypto wallet. Learn more about blockchain and cryptocurrency updates and increase your knowledge here at Casinodays India.