More than 10 years have passed since the first cryptocurrency appeared. With its popularity, such questions as to where and how to store access to assets began to appear. Of course, the main criterion is reliability. And then, there are such important factors as functionality, convenience, multicurrency, and so on.
At the moment, there are many variations of crypto wallets on the market. There are
- multi and mono currency;
- hardware and exchange;
- popular and those, that have appeared on the market recently.
Sometimes even experienced traders, not just beginners, get lost in this variety. So how do you choose a crypto wallet that won’t be scared to leave your millions? To begin with, let’s figure out what types of wallets there are.
Crypto wallets are divided into:
Custodial
The developer has the private keys and backups of all data. That is, he has the authority to protect assets directly
Non-custodial
Wallets, then all the keys are with the owner of the crypto wallet, and the responsibility for the safety of funds is already on the user’s shoulders.
Therefore, when choosing the type of wallet, users are more inclined to a non-custodial wallet, because here the possibility of theft of funds by intruders is excluded. However, don’t forget about the human factor and the possibility of error. If access to the custodial wallet is lost, the user has hope for his recovery.
There are two types of custodial wallets:
1. Exchange wallets
All keys are generated and remain at the developer stage. Therefore, they don’t reach users’ devices. Examples of businesses are Coinbase, Kraken, Bittrex, and so on.
However, if assets are stored on exchanges, there is a danger of losing them.
For example, in 2016, hackers stole about 120 thousand bitcoins from the Bitfinex exchange. Servers can also be arrested and funds lost, as happened with BTC-e in 2017.
2. Software wallets
That store data on their servers. Therefore, they are not particularly popular with users — an example of such a wallet- Freewallet.
It’s time to deal with non-custodial wallets. There are six types of them:
1. Software wallets (as in custodial)
Software wallets are downloaded as an application and then used from your device (computer or mobile device). It is one of the most convenient ways to manage your assets — examples: BlockchainWallet, Coinbase Wallet, TrustWallet, etc.
Let’s analyze this group in more detail using Venera Wallet as an example. Although Venera Wallet is a young project, it is in no way inferior to its competitors.
The keys to the wallets are stored by users, from which we conclude that the system is decentralized. This ensures complete security and confidence in the safety of assets.
Thanks to its multicurrency, the user has access to Bitcoin and more than 100 cryptocurrencies. Using the app, you can buy currency. There is also a function of buying cryptocurrencies using a credit card.
Thanks to the factors above, you will save nerves, time, and money.
2. Web Wallets
As a rule, they are offered on the websites of major cryptocurrency exchanges.
This type of wallet is most popular among beginners. Thanks to them, it is possible to store, quickly sell or transfer any cryptocurrency directly on the site.
The advantage is that the wallet can be accessed from anywhere in the world using a browser.
However, the possibility of hacker attacks is considered a considerable disadvantage. Furthermore, due to the high risk, storing large amounts on the account is extremely dangerous.
3. Mobile Wallets
Mobile wallets, as a rule, can be used to store amounts of assets of any size. The advantage is the ability to pay immediately in stores that accept payment in Bitcoin or Ethereum. Therefore, keeping some tokens in a mobile wallet is very convenient in the case of force majeure.
4. Paper wallets
How to use it?
A private key is created from generated random digits. Further, the code is encrypted so that outsiders who found the sheet could not decrypt it. This key is stored on paper in a safe place, preferably in several copies.
But it is important to remember that if this sheet falls into the hands of intruders, they will be able to empty the account.
5. Desktop Wallets
Desktop wallets, like their mobile equivalents, are applications for PC users. MetaMask, Exodus, and Electrum are examples of desktop wallets. For increased protection, several of these blockchain wallets include cold storage alternatives.
6. Hardware Wallets
These are small devices, usually in the form of a USB flash drive.
They are designed for highly secure storage of private keys.
The device is connected to a computer. Then, with the help of a unique application, a transaction is created, and a transfer signature is made using a key from a “flash drive”. The disadvantage is the high cost of the device.
Conclusion
Remember that keeping your assets is no less important than earning and receiving them. As technology grows, so does the number of scammers who can embezzle your savings. Be responsible about the choice and method of storing your savings.
