Crypto wallets or Cryptocurrency wallets are used to send, receive, transfer and store digital assets. It’s a vital tool for crypto enthusiasts as cryptocurrencies do not exists in physical forms but digitally stored on the blockchain.
Blockchain technology contains the transactional records detailing the private and public keys while having control over the funds. It is like a giant accounting ledger storing every transaction and total account balance of each public address.
In crypto world, one can give their wallet address if they want to receive coins from somebody. A wallet address can be compared just like a bank account number where there is no harm in sharing publicly if one wants to receive funds from the other party.
Unsure Which Crypto Wallet Best For You?
Different wallet address is available in the market depending on the preference and personal needs each catering to their unique specialty. The preference can range from someone wanting extra security, convenience, and user-friendliness:
Desktop Wallet
Desktop wallets are downloaded on a laptop or a desktop computer and can be only accessed only by that particular device. It offers security and convenience however, it is prone to hacker attack where wallet could then be accessed.
Mobile Wallet
A mobile wallet is very much similar to a desktop wallet and can be downloaded directly to one’s device. A wallet app can be directly downloaded to one’s cellphone where the user can access his coins directly through the app.
Web or Online Wallet
A web wallet or an online wallet offers the highest level of convenience in accessing one’s crypto coins. However, they are also the least secured as the wallet provider has full control over it. The wallet provider will store the user’s coin on the central server which means if hacked, the hacker would be able to take full control over all the funds.
Paper Wallet
A paper wallet is an unconventional crypto wallet wherein the user needs to just print the public and private keys onto a piece of paper. The keys being not connected to any central server makes it secure. If one needs to transfer funds, simply enter the keys into a software or web wallet or even scan the QR code that is printed.
Hardware Wallet
In terms of security, there is no match for a hardware wallet. It is a physical device that stores all the private and public crypto keys within the hardware. The device is not connected to the internet unless one needs to transfer funds. Hardware wallet makes virtually impossible to hack as private keys can be entered directly into the device itself.
Are Crypto Wallets Secured Enough? : Bolstering Security
No matter how much one ponders on the security about crypto wallets, if somebody gets hold of a user’s private keys then they can get hold of their funds too. The real question is what safeguards and necessary actions taken to prevent in the first place from happening. Crypto wallets having relations with the internet will always be vulnerable. Hackers always look for new ways to get access to people’s data which means one should be updated to do everything to protect their private key.
A hacker could find the loopholes and have access to a user’s fund alongside an internet connection:
Malware
Virus
Key logger
Remote access to your device
Phishing
One should protect oneself with the above potential threats such as making sure the device is using the latest software. Updating one’s software build-up to the highest level of security as hackers find new methods to override the inbuilt safety controls. Extra layers of security is a necessity like setting up two-factor authentication.
Wallet allowing multi-signatures is a good idea too. A user needs to authenticate a transaction using two or more separate devices. In that way if one of the devices is lost, stolen or hacked, the criminal won’t be able to access illegitimately as they would need the other device too. Backing up one’s wallet on regular occasions is also needed as if anything happens to the wallet, one could still regain access.
Beyond Crypto Wallets: Other Uses
While usually wallet apps are used to store cryptocurrencies, the software can also store the keys to fungible and non-fungible digital tokens such as goods, financial assets, securities, and services. For example, a token stored in a crypto wallet could represent concert or plane tickets, unique artwork or goods in a supply chain virtually anything with a digital value attached to it.
In the coming times, a new “trustless economy” could be based on blockchain and crypto wallets enabling everything from individual financial or professional histories, tax information, medical information, or consumer preferences to corporations maintaining employee or partner digital identities and controlling application access.
Digitized representations of traditional identity documents such as driver’s licenses, passports, birth certificates, Social Security/Medicare cards, voter registration info, and voting records could also be stored in crypto wallets, giving owners control over who has access. In this light, crypto wallets would be even more of a valuable entity making it more important and secured to what they are now.