If you are taking your first steps into the cryptocurrency ocean, you must learn about choosing a secure “cold wallet” or hardware wallet. Do you know the type? Those things that look like USB sticks but are not?
But what are those things, anyway? And why are they all the rage for crypto investors suddenly? Are they really that safe?
This article will tell you what these hardware wallets are, how they keep your digital assets safe, and how to pick the one that will suit you best.
So let’s begin with the basics.
Cryptocurrency wallets 101
Although, most crypto enthusiasts often recommend using a hardware cryptocurrency wallet. However, for new cryptonauts, choosing the right wallet, especially a bulky hardware gadget, sounds weird, remarkably, when plenty of alternatives are available. So, to help you understand better, here’s a quick breakdown of the different categories of cryptocurrency wallets.
These wallets are available through a web browser. They are usually a service provided by a third party, such as a cryptocurrency exchange. All you need to have is an account as a web wallet user. No software downloads or clients can save a lot of time and energy. However, the user’s assets are stored in a third party’s vault, and such websites can (and have been) compromised. The result can be a total loss of cryptocurrency. The best use for web wallets is to keep a small number of tokens you use for frequent transactions. But this is not a type of wallet in which you should keep many tokens or any amount for an extended period.
Desktop wallets are software you install on your desktop computer to store your private keys on your hard drive. They are safer than web wallets because you don’t need somebody else’s server to keep your assets. But whenever the computer in question goes online, it becomes hot storage, which means there’s a risk.
Desktop wallets are more versatile and autonomic than their web counterparts. But, long-term storage needs other means of storage, especially in large amounts.
These are portable alternatives for crypto investors on the go. In addition, they allow settling micropayments quickly. They are easy to use and usually include all the essential functions you expect from a wallet. So these are good options for all users, from beginners to the more experienced.
Convenience is the main feature of mobile wallets, of course. But their portability makes them easier to misplace or lose than their desktop cousins. So the best approach to mobile wallets is to consider them your purse for digital pocket money and nothing else.
Paper wallets are cold storage wallets. The wallet is nothing but a piece of cardboard (or metal, wood, or anything you can have printed) in which the private and public encryption keys are written or painted. Cold storage doesn’t get any harder than paper wallets, as nothing is less digital than a piece of cardboard. Deploying your coins for a transaction requires typing every essential character by character. Nothing is as immune to hackers as a paper wallet, so they are safe. However, if your little piece of paper goes missing or the ink fades out, they will take away your coins with them.