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Sirwin

Wallets & Security

By CryptoBlonde | CryptoBlonde | 19 Aug 2020


Hello, Publish0x Nation !!!

Back again for one of the most important topics but less researched about Cryptocurrencies...Wallets & Security.

This guide will help you to find the best cryptocurrency wallet for YOU! There's no "one size fits all" wallet. Wallets come on different platforms with different features. There are many ways to store and secure cryptocurrencies so let's take a look at each possibility. You have to keep in mind that a cryptocurrency is a purely digital asset, therefore, the one controlling your private key has unlimited access to your assets so it's crucial the importance of this topic. Similar to your bank account, the main rule is protect your PIN / private key and only share it with the ones you can trust 100%.

Write down your private key on a paper and lock it on a safe.

Not your keys, not your crypto !

Private and Public Keys

When you own cryptocurrencies, what you really own is a Private Key. Your private key is like an actual key: this key unlocks the right for its owner to spend the associated cryptocurrencies. As it provides access to your cryptocurrencies, it should, as the name suggests, remain private. In addition to a private key, there is also a Public Key. There is a cryptographic link between the public key and the private key. It’s possible to recover the public key if you own the private key but it’s impossible to find the private key using only the public key.

What is a Wallet?

A cryptocurrency wallet is a secure digital wallet used to store, receive and send digital currency like Bitcoin and access your assets with a private key. In order to use cryptocurrency, you will need to have and use a cryptocurrency wallet. Some wallets are built for a single cryptocurrency, some can be used for more than one coin, some wallets you’ll manage yourself, and some (like those found on exchanges) will be custodial. There are several ways of securing its private key and a range of wallet types to choose from, such as “paper wallet”, “soft wallet”, “hard wallet”, “exchanges”  and choose between, “cold wallet” or “hot wallet”.

Cold Wallet

The so-called “cold wallet” is every type of wallet where the private key is stored offline, with no connection to the internet.

Hot Wallet

Hot wallets are the wallets which are saved on a device with internet connection. Hot wallets aren't 100% secure and it is essential to understand their risks because today you need to expect that everything can be hacked.

Paper Wallet

A paper wallet is probably the most secure way to store coins but at the same time the most inconvenient. A paper wallet is nothing else than creating a private key and writing it down on a piece of paper. This type of storage is very safe, but unfortunately very inconvenient because you cannot access your wallet quickly.

Soft Wallet

Soft wallets are the most popular way of saving the private keys. They describe software which serves as a safe for your private key, where you have to come up with a password to protect it. It's important to know that theoretically your computer can be hacked; therefore, the password of the soft wallet shouldn't be saved anywhere on the computer as well. For your safety, you should write down your private key on a paper, just like a paper wallet. In case your device is broken, you can easily access your coins if you made a backup of your private key. If not, your coins are lost, therefore, it's vital to ALWAYS have a backup.

Always use strong passwords and whenever possible secure your wallet and all your web logins with 2 factor authentication (2FA)

Hard Wallet

Hard wallets are a combination of cold and hot wallets is a hardware wallet which stores the user's private keys (critical piece of information used to authorize outgoing transactions on the blockchain network) in a secure hardware device. The main principle behind hardware wallets is to provide full isolation between the private keys and your easy-to-hack computer or smartphone. This type of wallet was created by companies such as Ledger or Trezor, which created a wallet that can be compared to an USB-Stick. Even if it looks similar, it is not an ordinary one, as you need to enter a PIN code to access the wallet and all of the private keys on it. The Ledger company, for example, does have a backup of every data saved on your wallet; therefore, it is possible to restore it even if it was destroyed. (It does have pros and cons, at this point we do not want to say whether it is good or bad that they create backups). The speciality of Trezor is that you are required to touch the device and enter the PIN to enter your assets. Other manufacturers of hard wallets do not offer this service, but it is essential to know that Ledger has this characteristic. Besides, even here it is important to create a paper wallet as a backup in case you lose your data.

Exchanges

Exchanges are the most popular way of storing coins because it is the most convenient way, but......

If you store your coins on an exchange, you can easily trade them and send them anywhere you want. This is due to the reason that the exchange administers your private keys for you, however, this method of storing coins is highly risky. Remember you are not directly in possession of the private key which means, that if the exchange is hacked, you can lose your coins. This is the main reason why many people think a blockchain can be hacked or hackers can easily steal your coins. 

 

Think and take care about the storing possibilities.

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CryptoBlonde
CryptoBlonde

Crypto Enthusiastic. Crypto Hodler. NFT addict :-)


CryptoBlonde
CryptoBlonde

I'm a crypto enthusiastic who likes to learn all about the crypto world. I will share my journey with you all and hope you get inspired....feel free to comment.

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