Keeping cryptocurrency and making transactions is similar to walking on broken glass. So, which kind of cryptowallet now is most secure for keeping cryptocurrency? The team of Fund Platform shares some ideas with you.
What is cryptowallet?
It is a special custom giving you an opportunity to communicate with other blockchain-users. Soft transforms your pursuit to get or sent assets in blockchain. And then soft’s mechanism make a transaction, recording this operation in blockchain-archive at the same time.
All cryptowallets are divided into 4 types:
· online (called “hot” wallets work only in the network);
· programmed (wallets-programs downloaded to your personal computer);
· mobile (the programme again, but installed on your mobile phone);
· hardware (“physical” digital wallet, that can be even touched).
Online wallets
They are created directly on the Internet by an extension of an exchange. These wallets may exist on the special websites or to be connected to cryptocurrency exchanges (for instance, Poloniex, Bittrex, Bitstamp, Yobit Liqui, etc.).
Pros of online wallets:
• a fast and convenient access to a personal account (you require only one private key or a seed-phrase);
• convenience in making operations with assets;
• if a wallet is linked to an exchange, then trading will be very easy (if you, of course, can do it).
But these pros could turn out to be cons at any time. If you want to preserve your precious cryptomoney, then it’s better to keep your assets remotely from the Internet.
“Cold” wallets (as well as mobile)
They are able partially to secure money through a “cold” keeping all keys to a wallet. That means you write down or copy reserve data of a wallet in any place isolated from network. The wallet can receive cryptocurrency in offline regime.
• Wallets use two-factor authentication and API. It means that you confirm the transactions via several devices and accounts. There are ones of the most popular options: HolyTransaction, Kriptonator, CoinsBank, BIT.AC.
• Isolation from viruses. Especially, if application regularly updates software. There are wallets (for example, Armory) suggests usage of two computers, in offline and online regime. It will secure your transfers as much as possible, although may possibly complicate your life as well.
• It’s difficult to lurk after your money’s movements. Your wallets can constantly generate new addresses though all addresses are tied to one IP.
As you see, all advantages have their doubts. There is no ideal “cold” wallets. For example, Electrum and Jaxx have no two-factor authentication though the first is considered to be one of the most popular storages of bitcoin and the second even supports 26 cryptocurrencies.
• Many pitfalls might be hidden in wallet’s software. The closed source code, simply “legible” your transfer operations may occur to be a lucky find for thieves.
• Access to the Internet. It presents a big “bald patch” in your security strategy. A virus can monitor your transactions and pick up the necessary password;
• Individual cons: support not of all types of currencies, slow speed of transactions’ processing and so forth.
• inconvenience in money’s operating
Hardware wallets
The safest wallets. They have a “device”, physical shape, similar to a usual flash-card. Now the most wide-spread are Trezor, Ledger Nano S and KeepKey.
• the safest type of cryptocurrency’s storage; keys and passwords aren’t taken and aren’t in the network, they are generated by a wallet;
• all transfers are made in “device”, you see only the confirmed transaction;
• own strengthened software.
• The physical device might well be no-good or have problems with its software. the key generated by your wallet may be a threat to your security;
• The virus can seek addresses of your recipients. That is why, always check to whom you send money;
• High cost of a wallet, support only of certain cryptocurrencies.
What else does force you to doubt superiority of hardware wallets?
Recently two new viruses, Meltdown and Spectre, were found in the network. They draw on vulnerability of Intel, AMD and ARM and read out the data of keys entered by you. Developers of hardware wallets argue that nothing threatens your safety. However, since that moment when a wallet is connected to a device, big question appears. And creators of wallets understand it launching the strengthened measures of protection. This affects users in the form of delays of transactions, repeated confirmations of the personality and so on. Isn’t the blockchain network, being famous for its anonymity, losing this main quality? Certainly, all these fears are not the case to refuse operations with cryptocurrencies.
What to do?
First, always be careful. Download the most protected “cold” wallet with an open source code and keep you