If you’ve recently acquired, or are looking to acquire, cryptocurrency, you need to know how best to store your funds. The answer to this is simple: get a cryptocurrency wallet.
It is incredibly important that you store your crypto safely in a wallet, because in a world centred on technology, malicious hacks are frequent. A wallet functions by providing users with a private key. Lose this, and you lose access to your crypto. Don’t lose it, and you are the only one who can access the wallet. While it sounds simple, don’t understate the significance of losing your private key. A private key isn’t a physical, material key – it is more like a password. You wouldn’t give anybody your password to your social media accounts, so don’t give anyone your private key.
Once you have set your wallet up, it will generate a public and private key for you to use. The public key is used to send, receive, or verify transactions, while a private key is how you access your account balances and funds.
Hardware wallets are arguably the safest method of keeping your private stash safe. This is because they generate your keys offline, meaning they shouldn’t ever come into contact with the internet, which ultimately prevents hackers from compromising them. This shouldn’t be taken as sovereign, though – hardware wallets do have their flaws.
Web wallets are notorious in the crypto space. On the one hand, they are incredibly easy to use, set up, and get going. But on the other hand, they are very susceptible to malware and hackers. If you have a large amount of crypto, don’t bother storing it in a web wallet. Instead, place a large portion of your funds in a safer wallet, leaving only the crypto you intend to spend in a web wallet, if you use one at all.
Mobile wallets aren’t a great deal different from the likes of web, electronic, and software wallets. As mobile wallets are hosted, you are trusting a third party to keep your crypto safe, and again this makes them susceptible to malware and hacks. Though this is dependent on which mobile wallet you choose and which company developed it.
Desktop wallets are quite a popular choice because you can download them directly onto your computer. In doing so, you have the additional security of retaining control over the wallet since it is not hosted. However, you need to make periodic backups in case your computer malfunctions or becomes infected with a virus.
Whilst a paper wallet sounds rather archaic and obsolete, they are amongst the very best options for storing your crypto. With paper wallets, your private key will be printed onto a piece of paper as a QR code. You can then split the paper in two and hide it in two locations. This ensures a hacker cannot get a hold of your private key. Of course, though, if you lost both or even one of the pieces of paper, you would be in an unfavourable position.
In the end, there are pros and cons to all types of cryptocurrency wallets. Truthfully, there is not a stand-out wallet that is entirely safe and secure. An ideal method to remedy this would be to utilise a combination of wallets, but that requires more time and attention from the user. Before you choose which wallet you want to use, be sure to do your own research and find the most suitable one for your needs.
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