If you have invested in cryptocurrency and hold coins, what do you do next? Do you leave those holdings in the exchange and let them rest? Many do that, but it has not recommended. Exchange platforms that hold a lot of capital have always at high risk of getting hacked. Mt Gox exchange has a prime example, with its interface getting hacked in 2013 and more than 850,000 Bitcoins getting stolen. Today they would be valued at over USD 17 billion.
Some services such as Coinbase claim with surety that the funds on their website have insured against theft. They would be able to recover any funds stolen. However, we wouldn’t want to test their claims.
The consensus indicates that there’s a need for a more reliable method of keeping your cryptocurrency safe. The stakes are high and one shouldn’t put their earnings at risk because it seems convenient at the time. The safest option remains a cryptocurrency wallet.
There are a few different kinds of wallets, and before you put your foot down and make a decision, you may want to know about all of them thoroughly.
Bitcoin Wallet
Bitcoin Wallet is more like your bank account in comparison to the wallet you keep in your pocket. You cannot store a block out of a blockchain from the network in your Bitcoin wallet, however, you can keep their access safe. Bitcoin Wallets have a private key, which is similar to a PIN Code you have for your bank account. The public key is the public address that you need with your private key to access your coins.
Another thing that you should consider is your intention of how to use your funds. If you want to safe-keep and not utilize them for a longer period then an offline wallet could be your pick. However, if you plan on using your funds for daily usage and will be making frequent transactions it is recommended that you go for an online wallet.
Moreover, many Crypto wallets only cater to one type of cryptocurrency. If you have different coins, you may have to get different wallets for storage or look for one which caters to different cryptocurrencies in their policy.
Types of Cryptocurrency Wallets
There are different kinds of wallets to cater to your various needs and devices. It is important to have a look at all of them to decide which would best suit your needs.
Hardware Wallets
Hardware wallets have design to give supreme security when it comes to accessing your funds. When you connect it with a computer, it doesn’t require you to put your private key on the PC, instead, you enter it into the hardware device. This keeps your information secure even if the computer you connected it with was compromised.
In case you lose your hardware wallet, you have gain access back to a new device using the ‘seed words’ you had being allotted in your previous wallet. Seed words have a series of words that have generate to restore your funds in case you lose your device.
To use a hardware wallet, you would first need it to interact with a software wallet. They already feature their software wallets which makes it convenient to connect.
Ledger
Ledger Nano S Plus is one of the most popular hardware wallets available. It can be purchased for USD 83. It has mobile-friendly and can be used for most cryptocurrencies.
Trezor
Trezor can be used to store multiple currencies including but not limited to Litecoin, Bitcoin, and Ether. It has considered to be one of the safest and most famous devices. If you have a large chunk of currency, this could be an ideal pick.
Software Wallets
Software wallets have designed to remain on computational devices. There are three main types for these:
Desktop Wallets
They are programs on your computer that store your cryptocurrency on your laptop and PC. It gives you absolute control over your holding and you do not have to entrust any third-party platform to keep your currency secure.
At the same time, since its security is up to you. In a scenario where your device has compromised you have at risk of losing all your crypto in a blink of an eye. To counter this disadvantage, users operate on computers that are new or have no access to the internet to minimize risk.
Mobile Wallets
With an application installed on your smartphone device, you can easily access your holdings and make quick transactions. Mobile wallets come online and offline. With offline mobile wallets, you can store your coins on your phone, which is the same as on a PC or laptop as discussed previously. Online mobile wallets, on the other hand, would need access to the internet and can only be operated through cloud storage.
Online wallets
It accessed from any of your devices and have deem more convenient. They also offer features like linking them with your mobile or desktop wallets. This means you are putting your faith in them and their security policies.
There are various types of software wallets, each with different features and many catering to one particular cryptocurrency. You would need to look into every aspect of their offering to go for one.
Atomic Wallet
It’s relatively new and offers to store Bitcoin and more than 300 coins and tokens. It has considered user-friendly and is available on Mac, Windows, and Linus, and has a mobile application as well.
Electrum Wallet
This was one of the very first wallets for Bitcoin in the market. It is available on your laptop and your android devices. It comes with a fast interface and is incompatible with some hardware wallets. However, you cannot deem it user-friendly and may take a while to get a hang of it.
Paper Wallets
It has a paper containing your public and private key which can be accessed with a QR Code. They are in cold storage as there is complete detachment from the internet. Moreover, they are the most inexpensive option for storing your cryptocurrencies.
Many find paper wallets to be complicated to use and set up in comparison to a software wallet. In case you lose your paper wallet without any backup, there is no way of restoring your cryptocurrency. Moreover, since you would need a device to access your wallet, in case it is compromised, your holdings are at risk of getting hacked.
It’s essential to familiarise yourself with how to operate a paper wallet, or you may not be able to access your own cryptocurrency.
You may need to weigh out all these factors before you go for a paper wallet.
In conclusion
It’s difficult to assure you that any of these wallets are completely secure or these are the only options for safekeeping your cryptocurrency. There is a wide variety of wallets available now, with different features and offerings.
You must see what you want to prioritize; if security is your biggest concern, then hardware wallets might be the right choice for you.
Whatever you end up deciding, one thing we would emphasize over is keeping a backup. Hacking is a real risk in the cryptocurrency world and so is losing your private key, it’s better to keep your seed words safe, and utilize backup options offered by different wallets. Make sure to never lose your backup details and seed words, that would be a lose-lose situation with no way out.
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