There has never been a more exciting time to invest in cryptocurrencies.
Cryptocurrency Bitcoin (BTC) recently hit record highs, rising above $52,000 per coin. Everyone from individual investors to Tesla CEO Elon Musk has spoken highly of Dogecoin recently, despite its relative obscurity. Because of Coinbase’s expected IPO later this year, cryptocurrencies will have even more legitimacy and attention paid to them than they already have.
The first step in purchasing digital currency is deciding where you’ll keep it once you’ve purchased it for all of the above reasons. Choosing where to store your cryptocurrency is almost as important as purchasing it when investing in cryptocurrencies. So, in 2021, which cryptocurrency wallet should you use?
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What Is a Cryptocurrency Wallet?
Cryptocurrency wallets don’t actually store any money; the term “wallet” is misleading.
To access cryptocurrency funds scattered across a decentralised online ledger known as the blockchain, users need a private cryptographic key stored in their wallet. It’s critical that you protect your private keys, because if you do, you could lose all of your cryptocurrency investments.
In terms of Bitcoin wallet options, it’s easiest to categorise them as hardware (cold storage) or software (hot storage) (hot storage).
Cold storage, at the other end of the spectrum, is the most secure option. Due to their lack of internet connectivity, digital wallets that store keys offline on a physical medium such as a USB drive are known as cold storage wallets. User-controlled access and offline storage of all assets make it more difficult for criminals to steal from a user’s wallet. However, it’s not the most practical option if you need quick access to your wallet or you’re on the go.
Software wallets and online wallets are the two types of “hot storage” options. In both cases, the wallet is linked to the internet, making it a “hot” target for criminals. In contrast to software wallets, which can be installed on a computer or mobile device in the form of an app, online wallets function more like websites and are typically managed by a major cryptocurrency exchange. For users who plan to trade crypto assets frequently, hot wallets are more convenient because they keep their crypto assets online and thus make the transfer process easier. However, connecting to the internet has the same disadvantages for both: users are at risk of being hacked.
a hot wallet has an internet connection, whereas a cold wallet does not. There’s a fine line between security and ease of use when it comes to picking a Bitcoin wallet.
To summarise, if you’re considering a crypto wallet, here are your choices:
Hardware wallet: you connect the device to your computer or smartphone and store your keys there.
Software wallets: Apps that you install on your smartphone or computer.
Browser-based wallets: Wallets that you can interact with like a website via your web browser.
Hardware Wallet :
Private keys are stored on hardware wallets, which resemble keychain fobs and can be kept separate from your computer. Even if you connect it to your computer for a cryptocurrency transaction, any malware on your desktop will not be able to access your wallet!
Ledger and Trezor are the best cold storage wallets currently available.
CompoSecure’s chief innovation officer, Adam Lowe, says “The best security and ease of use should be considered when users compare hardware wallets. You’ll either stop using it or, even worse, lose access to your crypto if it appears to be too difficult to use.”
Many cryptocurrencies are supported by Ledger and Trezor wallets, and they have a solid physical appearance and feel to them, making them popular among users. Trezor was the first company to bring a cold wallet to market in 2013, and the company’s wallets are still very popular today thanks to multi-factor authentication security features and an intuitive touchscreen interface.
The Ledger Nano X includes a Bluetooth feature that allows you to use it on your device without a physical connection, and it supports more than 1,185 crypto assets.
Software Wallets :
This is the point at which security starts to give way to usability.
Due to malware that specifically targets cryptocurrency wallets, an infected Bitcoin wallet on your computer while you’re browsing the web is less secure than a hardware wallet. Wirex CEO and co-founder Pavel Matveev claims that while hardware wallets require physical access, “online wallets are kept secure using next-generation blockchain technology and encryption techniques, making them virtually impossible to hack.”
This does not mean it never happens, but a non-custodial wallet instead of a custodial wallet can help prevent theft. When you use a non-custodial wallet, you retain ownership of your digital wallet’s private cryptographic key. Custodial wallets, on the other hand, “hold your private key and keep your assets safe on your behalf,” according to Dov Marmor, Railsbank’s chief operating officer.
There are many desktop wallets out there, but the most well-known is the Electrum non-custodial wallet, which launched in 2011.
When it comes to BTC desktop wallets, “Electrum is the best known.” Electrum, on the other hand, he says, “has the advantage of being lightning network compatible and an advanced, ‘layer 2’ payment protocol that sits on top of the BTC network. ” Electrum’s only drawback is that it can only be used for bitcoin transactions.
It’s easy to see why Marmor prefers the BRD wallet for new users. New crypto traders can easily add funds and buy coins using BRD because of the user-friendly mobile interface and the streamlined transaction process.
Browser-based Wallets :
Using an online wallet is the most convenient way to store cryptocurrency. However, new cryptocurrency traders should be aware of a major drawback of these systems: they are vulnerable to being hacked. To date, exchanges have been hacked for over $1 billion, with more hacks that have not been reported suspected, according to Lowe.
When it comes to custodial wallets, you lose control of your cryptocurrency the moment you hand over your private key. As a result, Private Internet Access’ Caleb Chen advises customers to avoid web wallets that don’t let them store their own private keys.
Guarda is a web-based multicurrency wallet that supports a wide range of popular coins and tokens for non-custodial users who control their own keys. Users can also import and export private keys to and from other services, back up a wallet using a secure encryption algorithm, and purchase cryptocurrencies using fiat currency.