With the astronomical rise of cryptocurrencies, there are also lots of hacks and schemes on the rise. If you are into crypto or thinking of getting into crypto, you’ll definitely want to keep your cryptocurrency safe. One way to safeguard your cryptocurrencies is to use crypto-wallets.
But the question is, are crypto wallets safe? If you are asking the same thing, let us find out, and we will also share some of the safest options for crypto-wallets.
Kinds Of Crypto Wallets
There are many kinds of crypto wallets. The two main ones are: (1) the “Hot Wallet” and (2) the “Cold Storage.” Both have their strengths and weaknesses, which should help you determine which one to use. Some cryptocurrency users use both kinds of wallets for different purposes.
The hot wallet is the type that is connected online. The good thing about using hot wallets is that you can use them in facilitating basic transactions. Users who use cryptocurrency for purchasing would definitely prefer this type of wallet. However, the downside is that hot wallets are more vulnerable to hacks and other security threats than cold storage because of their connection to the internet.
A cold storage crypto wallet is one that keeps your digital coins but is not connected to the internet. This makes it less vulnerable compared to a hot wallet. The downside of using cold storage is you cannot access your funds right away, so you cannot transfer funds out quickly. You can’t just make purchases using your cold storage wallets.
Types of Crypto Wallets
Are crypto wallets safe? We will discuss this by going on each type of wallet. Like physical wallets, we also have different types of digital wallets. Each wallet has its strengths and weaknesses. As the owner, you would have to decide which wallet is more suitable for you. Here are some of the best and safest digital wallets we can use to keep our crypto safe.
Desktop wallets are offline wallets stored on your desktop computers. These types of wallets are cold storages, so it is safe from online hacks and other schemes. However, you should still watch out for viruses and malware that can compromise the safety of your desktop wallet. These threats can clean out your desktop wallets.
One way is when your machine becomes infected with a virus that deletes your files along with your personal key, you would be left without your crypto. Another problem could be malware designed to collect your keys and steal your crypto. Even cold storage has its battles of security risks.
The next one is paper wallets. As the name suggests, this is a paper that works as a digital wallet. How does that work? You get to have a public key and a private key. You need the public key to receive crypto anytime, and you use your private key to send out crypto or make a purchase. So you have these keys printed on a piece of paper.
Most users print their paper wallets then laminates them to prevent damaging them accidentally. Paper wallets were most popular during the early days of bitcoin. Nowadays, users are exploring different ways to secure their crypto.
Evidently, your crypto is very much secured if you’re using paper wallets. However, the downside is that it is really fragile compared to other methods. If the paper containing your private key is lost, burned, or damaged accidentally. You cannot access your crypto anymore. You can also lose the paper, or worse, get stolen from you physically.
User errors are also a downside of using paper wallets. If you use a printer connected to a large network, that printer contains a memory of your private keys. Some malware can extract this info from the printer. Inexperienced users might use the private key instead of the public key, sending out crypto instead of receiving it.
Hardware wallets are waterproof and virus-proof pieces that facilitate transactions, perfectly convenient for sending and receiving crypto. Some hardware wallets have storage backups and QR cameras. These types can be considered one of the safest crypto wallets out there. So, if you’re asking – are crypto wallets safe, you may want to try hardware wallets.
There are software wallets that can be considered hot and/or cold wallets because there are online and offline types of these. The offline software wallet is almost the same as desktop wallets. You manage your crypto wallet on that same device and do not connect it online.
On the other hand, online software wallets are software or applications that can facilitate transactions. Offline software wallets use both online and offline wallets to facilitate transactions. It is closely comparable to hardware wallets but seems more complicated, especially for non-technical users.
The offline wallet stores the private keys, while the online wallet has the public keys. The online wallets facilitate the transaction with the receiver or sender, and the user would verify that transaction through the offline wallet. The transaction moves back to the online wallet to announce the transaction to the network to make it a verified transaction. This is the best set-up that would work for me to keep me from worrying—are crypto wallets safe?
This might be the best solution for us, who keeps on worrying—are crypto wallets safe?
Cloud-based Software Wallets
You can access cloud-based software wallets at any time on any device. These are the handiest and on-the-go wallet out there. It is easy to transact using these, but with these, you store your private key online. Third parties can control them. Being online also makes it more vulnerable to hacking and theft. You can easily search for cloud-based software wallets you can use on the internet.
If you ever decide to use a crypto wallet for your cryptocurrency funds, I hope this article helped you answer the question: are crypto wallets safe? These wallets have their strengths and weaknesses. You just need to decide what crypto wallet suits you best. You can evaluate your needs and security considerations. We hope that you were able to do this. Lastly, you should take care of your crypto wallets the same way you protect your physical wallet, so you don’t lose your cryptocurrency funds. Find out more about crypto wallets here!