Cryptocurrency Wallet

Cryptocurrency wallets are either software programs and hardware device, which store your private credentials. The last-mentioned represents a pair of keys – a public one, which stands for your wallet address and a private one – the password to access it. Actually, your coins aren’t stored in the wallet but on the blockchain itself. This couple of keys basically lets you to approach and use them. Wallets are the tool, which help users to hold, send and receive their assets. Straight to the point – sending and receiving coins means that they change ownership.

For example, if John wants to send 1 BTC to Merry, he signs off his ownership, so the coin becomes Merry’s possession. When the miners approve the transaction and confirm that it’s registered in the block, then coins change their owner.

There are multiple wallet types and different criteria to differentiate them. I have prepared a small table with the basic classification and some examples for each type. 

Basically, wallets are either connected to the internet or not. That’s why I’m first splitting in these two groups. Online wallets are considered also ‘hot’ ones, because their constant connection to the Internet makes them vulnerable to hacking attempts. Nevertheless, they provide multiple security features, and they are convenient for daily usage. Offline wallets on the other side, are either a piece of paper or a hardware device. There’s another option, called brain wallet, which means that you should find a way to memorize both your keys. To be honest – it’s not between the most used one. Most frequently, hot wallets are used on a daily basis to perform multiple transactions with small amounts. Meanwhile cold wallets are popular for being able to securely store bigger amounts of coins. Back to online wallets – they might be split into three groups. The desktop version suggests PC or laptop installation and web wallets are usable on all kind of devices. When speaking of mobile apps, they are available uniquely and also in combination with a desktop edition. For example, Jaxx has both desktop and mobile versions, but Coinomi is only a mobile application.

I would like to present you the key factors to consider when choosing a cryptocurrency wallet. It always depends on your expectations, needs and for what purpose are you going to use it, but there are some crucial criteria, you should always keep in mind:

• Multi-coin support – some wallets are designed especially for a certain currency, and cannot work with any other crypto projects, while others support multiple coin projects.
• Ease of use – it may sound an understatement, but a good intuitive UI and UX makes a difference when using a crypto wallet. A good rule of thumb is to download and install a few wallets and try them before choosing one to invest your time in.
• Supported Operating systems – if you download a mobile wallet it will obviously support the OS of your device and most big mobile wallets already have apps built for both the iOS store and the Google Play Store, but what about desktop wallets? There always check if you have downloaded the package, dedicated to your OS type.
• Exchanges role – this is an often-underestimated thing but once you decide on a wallet, you’d like to deposit some initial funds to it, so you can start doing whatever you think is the best strategy to win money in crypto. Well, not all wallets allow credit / debit card deposits and require you to go through an exchange to get your initial crypto coins.
• Technical requirements – what kind of operating system you need; any specific internet access requirements by the wallet, for example you’ll need 20Kbs bandwidth to download the latest block header; how much free space should you have on the device (some wallets might need to keep a copy of the blockchain)
• Security and privacy – is it an open or closed source? Are there any anonymous transaction options, maybe additional security layers also. It’s all important when it comes to how to secure your funds.

• Tick

  Use a unique password you haven’t used anywhere before and encrypt the wallet

• Tick

  Have several different backups of your wallet(s) on several different USB sticks

• Cross

  Although technically you can use a wallet on whatever machine you want, Linux has better security features over Windows. If you do not want to use Linux as a main OS, at least do a virtual machine with Linux for the sake of your wallet’s security

• Tick

  Whichever OS system you end up choosing, do not perform any actions with / through the admin user. This account has too much access and if in fact the machine has malware software, it will be a bit harder to harm everything if it does not have access to the admin user

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  Choosing a good antivirus software is a must. If you are serious about crypto and crypto trading a free-ware antivirus just won’t do the job. Do some research and invest in a proper antivirus software that is regularly being updated to withstand the latest hacks and scams

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  Always look for 2-factor-authentication options where-ever possible. We cannot stress this enough. 2-factor-authentication is the bread and butter when it comes to protecting yourself digitally

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  Don’t digitalize an offline wallet. This defeats the purpose of having it as offline wallet in the first place

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  Make sure you and only you control the private key. If you have access to the coins, but do not control the private key, you do not have any coins, the one who controls the private key does.

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  Update the software regularly, regardless of which type or brand you are using, update to the latest versions to have the newest security patches and threads.