Different Options to Protect Your Crypto
| KEY TAKEAWAYS: |
| — There are multiple options to protect your crypto. — Hot wallets, such as exchanges or software wallets, are connected to the Internet making them appealing targets for hackers. Moreover, in this case, a third-party controls the private keys to the assets in the wallet. — Trusting third parties to safeguard your crypto assets is risky, as they are in charge of your private keys, not you. — Cold wallets are represented by digital asset wallets that are offline, i.e. not exposed to the Internet. They take the form of paper wallets or hardware wallet. — Hardware wallets are the safest solution to keep your crypto safe and maintaining high levels of security is essential in the cryptosphere. |
Just bought your first coins or NFT’s? We have you covered – here are the different options to protect your crypto assets.
The cryptocurrency wallet market is saturated with different wallets of all kinds — some great, some less so. The two primary types of wallets in the cryptocurrency ecosystem are “hot” and “cold” wallets. But what are the differences between these options?
Hot wallets
Hot wallets refer to custodial wallets that are easily accessible via mobile devices, laptops, and desktops where cryptocurrencies can be transferred easily and through user-friendly interfaces. However, these wallets are custodial, meaning that a third-party controls the private keys to the assets in the wallet. This represents a security vulnerability, as trusted third parties are security holes.
Additionally, hot wallets are exposed to the Internet, making them appealing targets for hackers to subvert the security measures of the administering third-party and steal users funds, which is poignantly represented by the litany of hacks in the cryptocurrency ecosystem.
Hot wallets are highly popular for mobile users and conveniently transferring small amounts of cryptocurrencies. However, users should never store vast sums in hot wallets nor trust their security measures. Treat hot wallets as you would treat a physical wallet, where you only keep small sums of cash at a time.
Cold wallets
Contrary to hot wallets, there are cold wallets. The industry standard for the secure storage of cryptocurrency assets, cold wallets are represented by digital asset wallets that are offline (i.e., not exposed to the Internet) and often take the form of hardware devices or paper wallets.
As they are completely offline, cold wallets provide a greater level of security.
Hardware wallets, like Ledger, are the flagship standard for security. Users, exchanges, and projects all favor hardware wallets as their long-term storage solutions for cryptocurrency assets.
Hardware wallets security
A hardware wallet is an encrypted, offline device for the secure and convenient storage of cryptocurrencies and digital assets.
It is widely acknowledged in the cryptocurrency industry that hardware wallets are the premium security solution to your digital assets. First, they exist as encrypted physical devices that deploy state-of-the-art security measures to thwart both physical and digital tampering. Second, they exist offline as non-custodial wallets, reducing their exposure to hackers and, in the process, only empowering the owner of the assets to control and access his/her assets.
Even if you only hold small amounts, there is no better way to protect your crypto than hardware wallet storage, which is best practice. Always retain control over your keys, and the ethos “not your keys, not your Bitcoin” will never adversely affect you.
In an industry rife with security vulnerabilities, hardware wallets should be an easy choice for the secure storage and management of your assets.
Knowledge is power.
Trust yourself and keep on learning. If you enjoy getting to grips with crypto and blockchain, check out our School of Block video all about ways to keep your crypto safe.