Since the rise of cryptocurrency in 2017, hackers have been developing various means of stealing an individual’s cryptocurrency tokens. Most of the bitcoin thefts that successfully done have happened in plain sight. Often, it is usually due to the carelessness of the owner of the cryptocurrency tokens or improper storage of their tokens.
Cryptocurrency tokens can be kept safe and secure using crypto wallets. These wallets are of different types with varying security levels, as will be described in this article. It is essential to point out that all the cryptocurrency wallet options have private keys attached to them. A wallet owner will only be able to access their cryptocurrency with these private keys.
Failure to remember these private keys will only result in the loss of the cryptocurrency tokens. It gets worse when a thief or hacker gets access to the crypto wallet’s private keys and addresses. This is why it is best to know the different storage options and security levels that can guarantee topnotch safety for your coin.
The wallet types available for saving your cryptocurrency tokens are:
DESKTOP WALLET
A desktop wallet, also called a “Cold Storage,” is the crypto wallet type that allows you to safely store your crypto on your desktop without connecting to the internet. The advantage this form of the wallet has over the other types is that your cryptocurrency is not exposed to anyone on the internet. Hence, it is unlikely to get hacked by anyone using the internet. The wallet is stored on your desktop, and you can only access it with a specific security key.
However, the chances of hacking a desktop wallet might be slim, but it is not impossible. If the desktop gets infected by malware, hackers can easily get into the desktop through this malware and figure out the security key. Once the security key has been gotten, it becomes easy to access the wallet owner’s cryptocurrency. This means that desktop wallet owners should protect their devices from any form of malware and keep their security key safe and private at all times.
HARDWARE WALLET
A hardware wallet functions as an external storage device of a computer. This wallet makes it possible for users to store their bitcoin and other cryptocurrencies on a device and move around with the device everywhere. It is more secure than a desktop wallet as a hardware wallet is more resistant to a malware attack. Another important advantage of using a hardware wallet is the anonymity that comes with its usage. Users of a hardware wallet can transact easily without having to fear leakage of their identity.
The only issue with a hardware wallet is the loss of the wallet. It won’t be an issue provided the owner remembers the seed phrase. This seed phrase is the only means of recovering the cryptocurrency in the wallet. Otherwise, it becomes impossible to get the crypto tokens in the wallet once lost, and if the owner does not remember the seed phrase.
HOT WALLET
Hot wallets are software wallets that investors and traders can keep their crypto tokens in, pending the time they would want to use it to complete any online transaction. They are somewhat different from the cold wallets because they are connected to the internet. This makes it easier for traders to transfer their earnings from any trading platforms into them.
However, with the ease of transaction comes possible theft and hacking since they are basically online. Hackers can get private keys and have access to the wallet owners’ cryptocurrency. This will lead to the loss of the currency in no time.
PAPER WALLET
A Paper wallet is another wallet type that works with complete anonymity. However, to use a paper wallet, a proper understanding of how digital currencies work is essential. Paper wallet can be generated online on dedicated websites; it can also be used offline. Its offline usage offers a more secure option.
Paper wallet works by writing the bitcoin seed in a specific pattern on a piece of paper. This seed will only be known to the owner of the wallet. Hence, the paper wallet does not take up space, whether online or offline, compared to other storage options.
PHYSICAL COINS
Newer services are now allowing bitcoin owners to buy physical bitcoin and hold them. These physical coins have a predetermined value written in a tamper-proof sticker form at the back of the Bitcoin. Purchase of the physical coins can be a bit more expensive than the normal value of the Bitcoin. This is because of the manufacturing and maintenance costs involved. Physical coins are usually not bought to hold because they can get missing easily. Instead, they are best used for transactions as soon as they are bought.
The loss of cryptocurrency in each of the wallets listed above is largely dependent on the owners’ behavior. Hence, it is essential to put the following into consideration when choosing and creating a wallet:
BACKUP
It is important to backup your crypto wallet often and in different locations. This will make it easier to retrace the wallet information in case of theft or hack. When backing up the data, also be sure to make use of a strong backup password to prevent hacking of the account.
CONSISTENT SOFTWARE UPDATE
For those using hot wallets, it is essential to use the latest software versions provided by the wallet developers. You can be sure that these updated versions have recent security protocols, which will go a long way in preventing hack or theft. Most hackers capitalize on accounts with older software as these have outdated security protocols.
CONCLUSION
Having a wallet is great; however, it is essential to consider the security level of each of these wallets before opting for any. Ensure that the wallet you are choosing is known and trusted. Also, update the security level of your crypto wallet regularly to avoid hacking or theft.
ABOUT THE WRITER
I am John Oladokun Opeyemi. Follow me on Facebook, Twitter, Instagram to access several updates on Business, Work, Marketing, Freelancing, and How to Build a Reputable/Profitable Brand or Business on the Internet.