The Complete Guide to Crypto Wallet Safety
When you enter the world of Crypto Trading, learning how to keep your currency safe is more important than ever...
What is a Crypto Wallet?
When trading and exchanging Cryptocurrencies, you need somewhere to keep your balance intact, and just like a physical wallet for cash, a Crypto Wallet will store your assets and balance. When you save your Cryptocurrencies (Like Ripple or Bitcoin to your wallet), you can pay for everyday things like your food shopping and online clothing.
Crypto wallets come in two forms, hot wallets, and cold wallets. A hot wallet can only be accessed while online via a mobile device, software wallet, the cloud or certain exchanges. A cold wallet isn't available online, and while your account will still get funds in as normal, nobody can transfer out of your account.
Cold wallets come in many forms, such as USB drives, paper wallets or even physical coins.
What Type of Wallet is the Safest?
When choosing the right kind of wallet, you want to be looking for the most secure option, and cold wallets - In particular Hardware Wallets, are the way to go.
Products like the Ledger Nano S, Ledger Nano X and Trezor One - Are perfect for maintaining the maximum security of your Crypto Assets. These kinds of wallets can store your keys and work as almost a Crypto Flashdrive. The keys remain inside the Hardware Wallet for its entire working life, which means even if the wallet is stolen, the person attempting to gain access to assets will still have to figure out the correct key/s.
Hardware Wallets provide the maximum safety of your Crypto Assets as it rules out any chance of remote hacking, which in the Crypto World, accounts for over 66% of all crime surrounding digital currency market trading. Physical theft, on the other hand, is 10 times less likely to occur, so those who invest in a product like this are definitely one step ahead.
Hardware Wallets generally retail for between $70 - $200, with the Ledger Nano S (2016 Model) being a great option if you are looking to budget your security.
What if I want to keep my Wallet Online Only?
Even though there is more risk associated with managing an online wallet - Having the ability to access your funds from anywhere in the world, instead of through a single PC or a dedicated Hard-drive can be very convenient. You may have heard of Coinbase, they are one of the most widely recognised online exchange wallets.
Coinbase will give you FDIC Insurance of up to $250,000, it can be accessed via mobile or PC, it is free to download and is very secure.
For additional peace of mind, you'll be glad to hear that the vast majority of Crypto Assets that are stored on Coinbase are held on a secure offline wallet (Cold Storage), so the chances of losing your assets are next to zero.
How can I Ensure my CryptoCurrency is Protected?
Whether you are opting for a hot or cold wallet, it is always best to add any extra layers of security when necessary. Here are a couple of tips to keep yourself safe:
Keeping your Computer or Mobile software up to date - this will provide you with the newest security features, which will provide added protection against not only your wallet but other private information on your device, as well.
Make your passwords complex and include them for every step of security - Whether it is logging in, withdrawing funds, or simply a third party signature tool like Armory. This will mean that another user must approve the legitimacy of a transaction before it can be made.
Don't store your currencies in one place - Split up your Crypto assets, perhaps hold the bulk of them in a secure, offline wallet like Trezor, and leave 5-10 per cent in your online trading account and wallet/s. This will protect you against the majority of hackers and rules out the risk of losing your currency if your computer was to fail (Such as a fried motherboard or a damaged RAM). Keeping a separate online wallet for day to day transactions and topping up when necessary is much safer than having the bulk of your Cryptocurrency stored online.
Can I Stay Safe For Free?
It is useful to know, Hardware Wallets are not free - So any free Crypto Wallets you look to use will either be digital, cloud or desktop.
There are many downloadable and searchable wallets, online or offline, that can be used without having to pay for a thing. The only feature you may find at a disadvantage is that you may be charged a higher fee for your Cryptocurrency transactions. Fees can range from anywhere between 0.01mBTC/kb to over 1mBTC/kb, 1mBTC basically means 0.001 of a Bitcoin, the latter fee is generally for larger sum transactions, and equates to $10-$15.
Here's a list of the most popular free wallets:
Jaxx Liberty - This desktop client wallet caters for all kinds of Cryptocurrency, with more than 85 on its list, it is one of the most downloaded desktop wallets globally. It can't however, enable users to be rewarded for mining crypto, so don't expect to get ongoing payments.
Atomic Wallet - Proving even better than the latter, Atomic Wallet allows users to trade with more than 300 kinds of Cryptocurrency, it is a powerful and easy to use wallet. There are a couple of minor flaws - No hardware wallet integration is available (yet) and the fees for trading and depositing funds are generally quite high in comparison to other online Crypto Wallets.
Electrum - Probably accounting for ten per cent of all Cryptocurrency transactions, Electrum is a free to use Crypto Wallet for those looking for the highest level of security. Electrum has been in the game since 2011, back in the days when Bitcoin was worth as much as a crate of beer. It is a must if you are looking to keep your assets secure, however, it is important to remember that with reputation, comes high fees in the world of Cryptocurrency, with Electrum charging a starting rate of 0.2 mBTC, although, this can be brought down to rates closer to 0.1 mBTC for certain transactions.
Well, there you have it, hopefully, you have a much better insight into the safest Crypto Wallets, the ways you can maximise your security, and the things to remember when trading your Bitcoin, Ripple, Litecoin, or whatever currency you may be invested in.
Remember, since Bitcoin was created, owners of Bitcoin have lost over $1 Billion in assets due to hacking and theft - Follow these tips and you won't ever have to worry about joining that tally!
Written By Harrison Jones