Storing your cryptocurrency safely with a good wallet isn’t difficult.
Are you looking for the best way to keep your investment safe?
Is it hard finding the best wallet to secure your digital currency?
If you want the best for storing your crypto-coins, am going to show you almost all kinds of wallet you can choose from to secure your assets safely.
There is no way you will be using only one kind, or type of cryptocurrency wallet, because we live in a world, where technology has made almost everything possible.
Many professionals likes using different wallets to safely guard their funds – be it a big money, or little pocket-money.
However, choosing the best wallet for your cryptocurrency transactions depends on specific needs you’re looking unto.
Before we continue, I’ll like you to know that the best kind of cryptocurrency wallet, is the one that allows you to have full access to your private keys.
Investors are always advised to keep their wallet private keys safe in a very secured place that only them will know.
If you also ask me, I will say that for me, a multiple currency wallet will be the best for you, because it will serve as a universal crypto wallet.
Let me go straight and explain what cryptocurrency wallet is all about.
What is cryptocurrency wallet?
If you are considering investing in cryptocurrencies like bitcoin, or any altcoin, that would be very great, but you will need somewhere to store them.
It is from this place that you will store your crypto investment is where from, you will be sending or receiving all your crypto assets.
This storage place, space or device is the cryptocurrency wallet.
Crypto wallets comes in forms and kinds, and they include hardware wallets, software wallets, paper and web online wallets.
Most of these kinds of wallets, especially the desktop software wallets runs in full nodes.
This means that they always download the complete blockchain copy to get access to cryptocurrency stake.
The full nodes wallets always takes time to synchronize with the blockchain to reach your stored cryptocurrencies.
This makes them to create massive amount of data in offline storage of the device.
Alternatively, there is a lite version of the wallet known as, Simple Payment Verification (SPV) wallets which uses the full node, but it uses full nodes hosted elsewhere.
This makes it helps to make it faster to reach blockchain network to confirm transactions.
Multi vs single crypto wallet
A single coin currency wallet is the type that only supports only one type of cryptocurrency.
These kind of crypto wallets are mostly made specifically for that cryptocurrency which they support.
For example, BitLox anonymous crypto hardware wallet is a bitcoin wallet made specifically for making bitcoin transactions anonymous.
In other words, multi-currency wallets are those cryptocurrency wallets that can support many crypto-coins at the same time.
As an investor, you may have acquired many kinds of cryptocurrencies, so maintaining all of them with separate wallets can be very tedious and overwhelming.
This is why you need to use a multi-currency wallet (universal wallet) that can securely hold all your crypto funds in one place at once.
Cryptocurrency wallet definition
A crypto wallet key is a very long alphanumeric series of codes, or pass-phrases that unlocks your crypto wallet content.
These pass-phrase called, seed words, which are unrelated words used to retrieve crypto assets stored in a wallet.
Anyways, wallet that uses these codes or pass-phrase is known as a HD (Hierarchical Deterministic) wallet.
In other words, anyone can have full control or access to all the cryptocurrency stored in your wallet, without the need to also have access to your devices.
This is how most people lose their cryptocurrency investments to thefts, so be very careful with where you’re keeping your seed word pass-phrases.
Wallet keys are used to create wallet transaction address.
Crypto wallet address is an ID characters used to receive, or send cryptocurrency from your wallet.
In HD wallets, wallet IDs can be created multiple times, and this helps to prevent you from sharing your private key publicly in the bid to transact with your investment portfolio.
Thus, there are still some risk involve in sharing addresses. Especially, when your public address is recognized in any transaction.
Types of Cryptocurrency Wallets
Before we proceed, there are different types of crypto wallets according to how they store, or retrieve the cryptocurrency stored with them during transactions.
These are the type of wallets that uses keys created by devices that has encrypted access to the Internet.
These types of wallets requires access to the Internet to store or retrieve your crypto assets.
The device in which they are installed can be fully accessed remotely.
Though hot wallets are the most popular type of wallets do to its utility, they are regarded as highly unsecured technologically.
In case of hack, they are always the very first target for most hackers
Cold wallets are regard as the most secured type of wallets, due to the fact that, they don’t need Internet access to send or retrieve transactions.
They totally store your investments without the need to reach the blockchain using Internet.
Brain wallets are the ones that only give you pass-phrases, and password you need to gain access to your investment.
Meanwhile, paper wallet is the type of wallet that you’ll need to write, or print your pass-phrases of your choice on a sheet of paper.
This is the type of wallet that is hosted or installed in a third-party server, which you don’t have any access to your private keys.
The private keys are held in an online server on your behalf.
In the case of hack attack, these servers are heavily attacked due to multiple number of wallets that are stored in them.
You can see these servers as banks that holds financial asset on your behalf, and they’re not insured, or regulated by the FDIC insurance.
This type of wallets is somehow the same with the cold wallets. It allows you the fullest access to your cryptocurrency transactions.
You will not need any third-party server, Internet or person to exchange your cryptocurrency with other platforms and investors.
It doesn’t increase your anonymity anyways.
Factors to know a secured wallet
Before you choose to start making use of any wallet, please make sure the cryptocurrency wallet has most of these features listed below…
1. Backup Private keys
To fully have control of your cryptocurrency investment portfolio, you will need a wallet that has a feature to back up its pass-phrase and seed words.
This will help you to retrieve or transfer your money to another wallet in the case of misplacement or lose.
2. Two-factor authentication
This kind of security is called, Second-Level-Security, and some wallets interchange this feature with fingerprint in devices that has bio-metric sensors.
2-FA is that kind of security whereby, if a hacker manages to crack or hijack your password, they will still need to comment a special kind of code.
This code will always be sent to your authentication app or phone number, before the access to your wallet can be granted.
3. Multi-signature support
This feature is for when more than one person is making use of a particular wallet address.
To avoid misusing, multi keys is needed before a some amount of Ripple coins can be transferred out of such address that has multi-sign feature.
However, this feature can also be used by one person to fully protect their cryptocurrency funds lose from theft.
4. Not hosted on an exchange
A large number of cryptocurrency enthusiasts have used exchange wallets like that of; Coinbase and Luno online wallet to keep their investments.
This is not a good practice, as there can be massive hack attack on the exchange.
The target mostly are on these kinds of wallets due the huge number of cryptocurrencies stored in it by the users of crypto exchanges.
Generally, storing cryptocurrencies using exchange wallet is not recommended for security purposes.
Moreover, these exchanges won’t allow access to your private keys, which they keep to themselves on your behalf.
This also means that, you don’t have any control of your cryptocurrency investment.
Avoid using exchange wallets unless you’re using the platform for a short time-frame, then still move them to a more secured wallet.
Kinds of cryptocurrency wallets
This also brings us to discuss on the kinds of cryptocurrency wallets, how they are, and how they work altogether:
Hardware wallets are most recommended, because they have high hierarchical deterministic feature for maximum security.
They are easy to carry about, due the fact they look like USB devices, which allows you access to your private keys.
Software wallets are mostly secured PC and mobile applications, or software made specifically for storing cryptocurrencies.
Some of these wallets are also offline wallets, but still not as secured as hardware wallets.
Software wallets needs to be online in order to connect to the blockchain, and access the current balance of your crypto assets.
This is a less secured way of storing your cryptocurrency assets, even though most amateurs think they’re among the best wallets.
These wallets are hosted on exchanges to temporally keep your private keys, while using the platform.
It’s mostly not advisable to leave your coins on the exchanges for too long, to avoid loosing your cryptocurrency investment in case of hack attacks.
These are not really the best cryptocurrency wallets in the market, but allows you to print, or write out your private keys on a piece of paper.
But the risk of loosing your investment due to misplacement of the paper, or tear is higher than other wallets.
This kind of wallet are also among the most secured wallet, but it also comes with a risk of loosing your cryptocurrencies if not kept away from water.
My final thoughts
The best wallets to be used for reducing the risk of loosing your investment, are hardware wallets.
They don’t need to continuously have access to the Internet to keep your coins, and they’re always secured from hackers.
The smartest investment strategy to use other kinds of wallet, is to keep up a time-frame for keeping any crypto asset with the unsecured wallets.