Cryptocurrency Wallets: Security and Types

Cryptocurrency wallets are the other half of this industry’s essential bread-and-butter combo.
Without Crypto wallets at your bidding, transactions wouldn’t resolve, you wouldn’t get your crypto, and the whole thing would be in chaos and disarray. And that is why we’re all so thankful for them.

But hold that thought, as we’re not done with the crypto wallet conundrum yet. Today, the whole crypto industry is ridden with these wallets from all sources and codes, aiming to either solve a niche problem in the crypto world or offer something different to the table to redefine the crypto storage technology.

So, to ensure you don’t get that dreaded information overload over which wallets you should use or stick to, Let us take you on a quick tour down the rabbit hole of crypto wallets and find out what’s best for you!

What is a Crypto Wallet?

No discussion about wallets can take off without divulging what a crypto wallet is. So, let’s take a quick trip and figure out what a crypto wallet is!

Simply put, a cryptocurrency wallet works similarly to that leather wallet you’ve been holding on to for years. But instead of storing fiat currency (cash), pictures, and scratch cards, your crypto wallet specifically holds cryptocurrencies only, and they’re a bit picky too.

Each crypto wallet caters only to a single network, although, as time passed, multi-network wallets have become a thing. In any case, the gist is that your crypto wallet is your best pal for storing crypto.

Every wallet comes with its private keys, which come in many flavors. But the most common ones are either made up of long strings of texts of randomized letters and numbers that you would need to fill in like a password or as seed phrases composed of randomized words which you would need to either choose among a pool of other words, rearrange into their specific order from when you got them the first time, or both.

That’s pretty much what a crypto wallet is like and how it works, but you would want to know about the following information.

Crypto Wallet Types

Every cryptocurrency user must know about the types of wallet he’s using because getting confused between wallet types could mean a loss of your crypto investment! So, let’s discern between which wallet types, how you use each, and how each protects you!

Hot wallets

Hot wallets are typically wallets that you have, which you use for transacting on the internet. They could be anything, but as long as you primarily use them for transacting, temporary safekeeping of your cryptocurrencies, or easy access when you’re on the go, it’s considered a Hot wallet.

Be very careful, though, as most hot wallets are vulnerable to attacks and hacks since getting access to these wallets is a breeze. So exercise extreme caution when you are transacting over the internet.

As the age-old adage says, “don’t click on anything shiny on the internet!” 

Also Read: https://cashcryptohelp.com/what-are-the-benefits-and-drawbacks-of-blockchain-technology/

Cold wallets

On the other hand, cold wallets are crypto wallets that don’t connect to the internet. 

Not many people in the crypto world use these wallets, though, as these are typically only used for storing large amounts of crypto. We’re talking thousands, if not millions, in crypto, which you can’t sell, trade, or use without ruining the economy of the cryptocurrency you’re holding.

They come in many shapes and forms, but the consensus is that you can turn anything with a file storage capability into a cold wallet. Hard drives are a typical choice for enthusiasts and general users, but preppers and security freaks lean more toward cold wallets with extra features and portability.

Exchange Wallets

Exchange wallets are a hot topic right now as it’s still debated whether they are really yours, but the gist is that these are readily prepared wallets that exchanges give out to users who will sign up for their service.

They’re not the best at security among all types of wallets as not only are they connected to the internet, but exchange wallets are usually also linked to the exchange’s treasury. So that means hackers get premium access to your accounts and millions of others once they get in, which has happened multiple times in the past, where millions of crypto were stolen in the blink of an eye.

Bitcoin Wallets

Bitcoin wallets are as cut and dry as it sounds. They are wallets that you only specifically use to store bitcoins. You typically use these as storage for preparing for an upcoming bull run or to pool all of your cryptocurrencies in Bitcoin valuation for finance and accounting purposes, but on their own, they don’t do much besides being used to store Bitcoin.

What are Crypto Exchanges?

Cryptocurrency exchanges are platforms where you can buy, sell, and trade cryptocurrencies. Many exchanges offer other services, like staking your crypto for passive income yields, vouchers, stubs, and rewards for keeping your coins with these exchanges.

Exchanges also offer wallet services too. However, you must note that exchange wallets are hot wallets. Hence, they are more vulnerable to hacking. If you are storing a large amount of cryptocurrency on an exchange, it is best to withdraw it to your cold wallet and keep it airtight (a general crypto term that means wallets closed off to the internet completely).

Which Wallet is The Best For Me?

Asking for the best wallet is a little subjective, as it’s always up to you. Factors that affect how you transact and store crypto play a pivotal role in what influences you to think one wallet is better than the rest.

For instance, whales and bagholders in the crypto industry find cold wallets the perfect type to use as they are safe and more reliable security-wise. They can store large quantities of Bitcoin and other valuable crypto assets in these wallets without worrying about losing them to a snotty-nosed hacker.

On the other hand, users with little to no consistent crypto holdings find hot wallets to the best ones out there. They’re easily accessible, able to be used on the internet, and relatively safer than exchange wallets as long as you’re cautious when using them.

As you can see, it’s all a matter of preference when choosing cryptocurrency wallets. But as your ever-reliable tour guide, We would always advise using both types of wallets—hot wallets for fast transactions and cold wallets if you’re storing crypto for good.

Putting Crypto On Your Wallet

Putting cryptocurrency you bought or got is as easy as 1-2-3! Well, at least before you make sure you exercise caution and remember these golden rules:

• If you’re using a hot wallet, ensure your public address key is correct, so don’t send your crypto to someone else. 
• When using wallets with multi-chain features like Metamask, switch to the network you’re transacting first and transfer all your cryptocurrencies accordingly so your transactions go through. 
• Never give out your private keys, not even when asked. Your private keys are for your eyes only.

Once you’ve done all these essential steps, all you need to do is press buttons and wait for the transaction to go through. You will receive a confirmation message once the transfer/transaction is complete.

The same thing applies when you’re using cold wallets, but don’t let these wallets stay on the internet for long or even send public addresses of your cold wallets to anyone, as that would jeopardize their security and would practically make them useless.

Keeping your Crypto Safe

Keeping your Crypto Safe means keeping your wallets safe as well. After all, whatever you do with your crypto, it will always begin and end with your wallet. 

To keep your wallets safe and away from any hacker’s reach, always exercise caution, and do the following:

• Make sure that you’re not sharing private keys and seed phrases or saving them on easily hackable platforms like emails, social media accounts, or forum boards. 
• Only transact in exact amounts. Transferring crypto from your cold wallet to your hot wallet is not advisable, as you could mistakenly send the wrong amounts to addresses, which would be cumbersome. Also, the extra crypto you have lingering on your hot wallets could be taken by hackers and scammers, should they gain access to your accounts.

Keep your wallets safe and secure, and treat them with the same care as you would give to a pet or a loved one. The crypto world could be treacherous and chaotic, and your first and last line of defense will always be your wallets.

Wrap Up

And that’s it for everything you need to know about crypto wallets and how to secure them. We hope you gained an indispensable understanding of navigating the crypto world now that you’ve learned about your crypto wallet buddies from the best! 

Always be careful when you’re on the internet. Learning about something more always helps, so do your research, and don’t hesitate to ask questions, especially if it’s all about crypto! 

Take care and we hope you have a safe and exciting crypto journey! 

Author’s Bio:

Amelia Gomez is a versatile professional, adept at managing multiple roles as a creative writer, marketer, and entrepreneur. Her writing pursuits span various subjects, with a notable emphasis on cryptocurrency-related projects like Ido Launchpad, Bitcoin, and Etsy.