Ok, so you have finally invested your money in some cryptocurrency. What now?
Do you leave it to remain in the exchange or service that you bought it from? Possibly. However, it is not recommended at all as a long time investment.
What if the exchange is hacked?, Then what happens to your valuable money?
Virtual Currency exchanges and servers contain large amounts of currency and are therefore happen to be significant targets for hackers.
There have been a great many examples of exchanges being hacked, the Mt Gox exchange got hacked in 2013 remains one of the most notable examples.
In that unfortunate incident, over 850,000 Bitcoin were taken, valued at more than $450 million at the time.
Some exchanges such as Coinbase insist that all the currency that they store in their exchange are insured against fraud and that this insurance policy would comprise any customer funds lost.
Yet it’s probably not something that you want to put to trial.
Therefore with the risks being so high, the safest option would be to store your currency in a cryptocurrency wallet.
Cryptocurrency wallets
Cryptocurrency wallets are typically software programs that save your public and private keys and interface with several blockchains.
With the help of these wallets, users can monitor their balance, send money and conduct other transactions.
A virtual currency wallet is just similar to a bank account which means you can store, collect and transfer your digital currencies to different wallet accounts or utilize it for making purchases.
Whether you wish to trade in cryptocurrencies or want to have them as your asset, you should employ a wallet account.
However, you may find yourself faced with plenty of questions.
But how do these work? Should I pick one that is online or offline? What is the significant difference between a hardware and software wallet?
I have answered all your concerns in the rest of the article.
Types of Bitcoin Wallets
More and number of people are following into the crypto world every day via with the help of crypto exchange platforms.
And as you learn more about exchanges and currencies, you will very naturally look for wallets to store your currencies on.
To give you a fundamental idea, cryptocurrencies are usually stored in one of the two ways: either hardware or software wallets.
Although there happen to be pros and cons of using each one, both wallets give you the ability to store and use your coins securely.
Understanding the critical differences between the two will help you decide which kind of wallet is best for you.
Software Wallets
Software wallets are basically non-physical applications that you download onto your computer or mobile device.
These are normally very easy to use but are potentially vulnerable if the device they’re on is compromised or hacked.
Software wallets are basically utilized for making smaller transactions when shopping both online and offline with Bitcoin.
For more information on software wallets check out my last blog.
Hardware Wallets
One other way by which you can store your virtual currency is within a hardware wallet also known as cold storage.
Hardware wallets are physical devices resembling an external drive that is completely different from online exchanges.
You have to plug in your cold storage into a computer or online device to obtain your digital currency.
Once accessed, your digital currency can be saved in the hardware wallet device, and it will no longer be collected on online exchanges.
The private keys for your hardware wallet will be saved on the device which only you have access to.
Hardware wallets give the safest way to store your cryptocurrency.
Although it may not be conveniently accessible, especially when compared to software or exchange wallets, cold storage eliminates the level of trust between yourself and the exchange.
It also makes sure that you’ll never have to worry about your tokens being hacked or stolen.
Even if your computer gets hacked or your wallet is taken, the thief will be unable to transfer your coins without knowing your passphrase.
Additionally, if you do happen to lose your hardware wallet, you can always restore your coins to a new wallet.
If you are looking to store cryptocurrency for a long time and want to ensure the highest form of security, then I
Keep in mind that for your own safety, it is recommended that coins are not stored in an exchange wallet for extended periods.
Be vigilant about scams, though.
If you purchase from anyone other than a reputable vendor, the wallet’s seed phrase may have been compromised, and the potential to lose your entire offline wallet exists.
Don’t forget that once you place an order for a hardware wallet, it could take months to arrive depending on where you purchase it from, so you might want to order it as soon as possible.
When it comes to picking the best hardware wallet to store your coins, there are dozens of wallets on the market to pick from.
To make this process a little bit easier for you, I have selected 3 best hardware wallets available in the market:
TREZOR One
TREZOR One wallet was brought to the market back in August 2014 by SatoshiLabs and is considered to be the world’s first Bitcoin hardware wallet.
It extends a combination of reliable offline cold storage, as well as the potential to spend tokens with a similar utility as a hot wallet.
One of the most distinctive features of the TREZOR One wallet is mostly its appearance.
It is a little device about the size of a car-key that connects to your computer through a USB cable.
TREZOR is also capable of safely being used on a computer that has been affected by malware.
The TREZOR wallet supports a wide variety of cryptocurrencies.
The company behind the TREZOR (Satoshi Labs) is deemed a pioneer in the whole Bitcoin industry.
Added security means such as PIN codes and passphrases get this hardware wallet as close to the title hack-proof as you can get.
TREZOR is regarded to be one of the simple devices on the market.Its user-friendliness has made it a popular choice.
However, Trezor wallets retail at a price of $99 / £99, which means that it is only a realistic option for individuals who have large amounts of digital currencies to be stored.
Pros
- 100% cold storage
- The original Bitcoin hardware wallet
- Two-factor authentication (2FA)
- Signs each crypto transaction uniquely
Cons
- Still experiences security attacks through its firmware
- No seed keys generated
The Ledger Nano S wallet
The Ledger Nano S wallet company was established in 2014 in France, and since then, Ledger wallet has managed to keep itself in the headlines.
The Ledger team headed to quickly become one of the biggest hardware wallet providers on the market.
The Ledger Nano S wallet is an entry-level and most well-known cryptocurrency wallet. It is a compact USB device which is based on a smart card.
The Ledger Nano S is petite and compact. It also has an alloy casing which makes it more long-lasting when compared to other hardware wallets.
The way the Ledger Wallets runs is pretty similar to any hardware wallet.
When you first plug the wallet into your computer and set it up you will select a PIN to preserve the equipment from unwanted access.
Later, you will get a 24-word seed that will be used to generate your private keys.
Ledger Wallet prices begin at $65 / £55, and you can reach your funds using the device without even attaching it to a computer device.
Nevertheless, the software is not as superior as the Trezor, and it does not come with some of the other fine little features of the Trezor, such as password management.
Pros
- Multi-currency support
- Wallet software integration
- OLED display
- Affordable
Cons
- Brand reputation still growing.
KeepKey
KeepKey is a protected Bitcoin hardware wallet that uses high-level technology to present it’s users with one of the most stable environments for saving their cryptos.
Launched back in 2015, KeepKey is an advanced multi cryptocurrency hardware wallet in the market.
The KeepKey wallet is ideal if you’re an investor storing multiple cryptocurrencies.
The wallet enables the storage and trade of a great variety of cryptos, such as Bitcoin, Ethereum, Litecoin, Namecoin, Dash, and Dogecoin.
KeepKey wallet is one of the most used pieces of hardware utilized for securely storing Bitcoins and other forms of cryptocurrency.
It is right up there with other popular cryptocurrency wallets such as Trezor and Ledger.
KeepKey is priced to compete with these other two hardware wallet giants and offers similar functionality, combined with a fresh and simplistic design.
Similar to the Ledger Nano S and TREZOR, KeepKey is also easy to install and very secure.
It also has some more superior features, making it an excellent choice for new and experienced Bitcoin users equally!
A feature that draws a lot of people to the KeepKey Bitcoin wallet is its claim that it offers “bank-grade security.”
When KeepKey was initially launched, it was sold for $239. The price of the wallet has come down considerably since to $99.
KeepKey is still slightly expensive than some other Bitcoin hardware wallets, but the high price tag is mostly because of its metal body, digital screen, and high level of security.
Pros
- Security features.
- Attractive design.
- Multi-currency support.
- Value for money.
Cons
- Requires third-party software add-on.
- Less portable than TREZOR or Ledger.
- Can’t save setup progress.
Hardware wallets are the safest wallets you can find on the market to protect cryptocurrencies from thieves, malware, viruses, and other possible attacks.
If you are looking for a hardware wallet, you should first inform yourself comprehensively and compare as many wallets as possible. So you can be sure that the wallet meets your own requirements.
As mentioned before, the devices I have discussed here are a type of cold storage. That means the access to the virtual wallet, i. e. the private key, was retained offline and no one but you ever have access to it.
As a cryptocurrency user, it is essential to know that you are really the owner of your virtual currency if you and only you know and own the private keys for your wallet.
Join the community of subscribers & get exclusive Crypto tips & tricks
