Crypto Wallets: How to Store Your Cryptocurrencies Safely?
Crypto

Crypto Wallets: How to Store Your Cryptocurrencies Safely?

Most of the investors that we know store their crypto assets in single crypto wallets, which is such a bad idea. As cryptocurrencies and wallets are all fed and stored on the blockchain, there are high chances that people with unfaithful intentions can easily spy on your stakes on different cryptocurrencies. This is just like owning kilos of gold and putting it out in the open for everyone to see. It is bound to get in the sight of thieves. To avoid that, we keep our gold and other precious elements in lockers.

The same is the case with blockchains. No matter how decentralized they might look, the wallet addresses can still be tracked to see the number of funds in them. Else, how do you think the list of top crypto investors is created? Therefore, storing crypto assets in a single wallet is a bad idea. Let’s discuss crypto wallets in detail and how they work before knowing the safe ways to store crypto assets. 

What are Crypto Wallets?

Crypto wallets are just like traditional wallets in terms of applications. They allow the users to store their cryptocurrencies and other blockchain-based assets like NFTs and perform transactions with them. Imagine having money but no place to keep it. It is prone to thefts, right? The same goes for cryptocurrencies. Being digital currencies, they also need a safe place for their storage and carrying out transactions. Now imagine having money stored in a physical wallet and nowhere else. If your wallet gets stolen, all of your money is gone. But if you keep some money in your wallet and some money in your bank account, your money in the bank account will be safe. Similarly, storing crypto assets in a single wallet is a bad idea. Before we jump in to discuss why let’s learn more about wallets. 

Types of Crypto Wallets

There are two types of crypto wallets in the market, hot wallets, and cold wallets. Hot wallets are further classified into three types namely, desktop wallets, mobile wallets, and web wallets. On the other hand, there are only two further types of cold wallets namely paper wallets and hardware wallets. While cold wallets store your crypto assets in offline mode, hot wallets provide crypto storage in online mode. So, whenever you want to access your funds in a hot wallet, you need to connect your device to an internet connection. Let’s learn about each of the types of cold and hot wallets in a bit more detail. 

Types of Crypto Wallets
Types of Crypto Wallets

1. Desktop Wallets

Desktop wallets are basically wallet applications that need to be downloaded on the desktop to store the private keys to the assets. The owner has complete control over who can access the keys because the desktop wallets are password protected. The major drawback of desktop wallets is that the user can not access them from any location. 

2. Mobile Wallets

Mobile wallets are an improved version of desktop wallets as similar to desktop wallets, the users have to download an application on their mobile to access the wallet. However, since mobile phones are prone to getting stolen, there are security risks attached to mobile wallets. 

3. Web Wallets

Web wallets are browsers that help users in storing their crypto assets. In this case, the governing authority of the browser has much of the control over your private keys. While this can act as an insecurity feature with web wallets, the fact that the user can access them anywhere just by opening the browser on a device is something that makes web wallets desirable for some users. In addition to this, multi-signature wallets offer some control over the private keys to the users. 

4. Paper Wallets

As the name suggests, paper wallets are pieces of paper that contain information about your crypto assets. But there are several drawbacks in the case of paper wallets. They are time-consuming and less secure as the loss of a paper wallet can lead to an instant loss of your crypto assets. 

5. Hardware Wallets

Hardware wallets look like USD drives which can be carried around and connected to any device to access the data stored on the wallet. They offer the highest level of security as the private keys of the user are kept away from any kind of online exposure. Also, in case of loss of hardware wallets, your assets are still safe as no one can carry the transactions unless they have the complete details and provide the needed validation to complete the transaction. 

Why Storing Assets in a Single Crypto Wallet is a Bad Idea?

Storing crypto assets in a single wallet is a very bad idea. It is because you can never be completely sure about the security of your current wallet. When your cryptocurrencies are connected to an internet connection, they are always prone to cyber-attacks and scams. Here are the two most important reasons why storing crypto assets in a single wallet is such a bad idea.

Blockchain Risks

The decentralized and transparent nature of blockchains is the most striking feature of blockchain. This is the main reason why so many people feel inclined toward investing in cryptocurrencies. However, this transparency can also be the reason for scams. It is because if a user dedicated time and diligence to exploring the blockchain, they can easily extract all the important information that may be needed to steal cryptocurrencies from someone’s online wallet or exchanges. This means that the criminals can easily spot wallets with a considerable fortune deposited and hack it. 

Private Key Risks

Private keys are the keys to accessing the cryptocurrencies stored in a wallet. These keys are unrecoverable, which means, that if you lose them, you will lose all your assets. Secondly, if someone is too cautious about losing their private keys, this can create an additional burden over their heads to remember the private keys and constantly worry about forgetting them and losing access to their funds. 

To prevent such a scenario from happening, it is important for investors to split their cryptocurrencies among several parts and store them in multiple wallets. This should be especially applicable to high-valued currencies like Bitcoin and Ethereum. 

How to Store Your Crypto Assets Safely?

Hardware wallets are the safest way to store your cryptocurrencies. It is because they overcome all the drawbacks of hot wallets and paper-based cold wallets. Here are some of the reasons why hardware wallets are so safe for storing your cryptocurrencies and other blockchain-based assets. 

  1. Since hardware wallets do not expose your private keys online, it ensures that your assets are not prone to attacks by hackers or other online security breaches, as in the case of web wallets. 
  2. Hardware wallets are portable so you can carry them wherever you want. This doesn’t only increase the security of your assets but also overcomes the flaws of hot wallets like desktop wallets.
  3. As the wallets are not based on any application, the user doesn’t need to worry about the software updates in order to enjoy all the features and functionalities of the wallet. 

Conclusion

If you have been storing crypto assets in a single wallet, it’s time for you to store them in different wallets, especially hardware wallets. Make sure you pick the wallet with the highest security and features that give you complete control over your assets. You can try multi-signature wallets to store your crypto assets. 

3 thoughts on “Crypto Wallets: How to Store Your Cryptocurrencies Safely?

  1. I think other website proprietors should take this website as an model, very clean and fantastic user genial style and design, let alone the content. You’re an expert in this topic!

Leave a Reply

Your email address will not be published. Required fields are marked *