Cryptocurrency wallets are devices that can be used to store your cryptocurrency and allow access when needed. These wallets come in online and offline versions. In this post, we will take a look at what things you should examine before selecting the right cryptocurrency wallet for yourself. We will talk about the security and control features (among other things) that you should be mindful of. Let’s get started.
Cryptocurrency Wallets 101
What is a cryptocurrency wallet?
Cryptocurrency wallets are digital software that allows you to store your current balance on the blockchain. Cryptocurrency wallets are a storage tool that allows investors to transfer, trade and more, as well as control their current assets. With the crypto money wallet that you have created personally, you can trade crypto money. You must have a wallet to be able to transact in the crypto money system, otherwise, you will not be able to transact. Getting a good cryptocurrency wallet and trading on platforms like quantum ai will really help you with your financial goals.
Your crypto assets are actually registered to the Blockchain, not inside your wallet. In other words, it is an identity for you to take action in this common area. Whether it is online or offline does not change this situation, as a result, even if you have an offline (cold wallet) code, the code assigned to the wallet is registered to the blockchain base. In short, every cryptocurrency investor absolutely has a wallet.
How does a cryptocurrency wallet work?
There is something misunderstood about the cryptocurrency wallets that dozens of investors use. This is a similar hold of digital wallets and traditional wallets. Cryptocurrency wallets do not physically store your money. But in the use of cold wallets, a physical tool can enable you to carry your wallet with you.
What are the things to consider when using a cryptocurrency wallet?
The most important thing to consider when transferring coins is that the wallet code is correct. Wallet codes of 30 characters are complex as they consist of letters and numbers. Although it may seem difficult for the person who wants to perform this transfer process, it is definitely a point that should be paid attention to. As it is known, if the IBAN numbers or account information used for money transfer between banks are incorrect, it is possible to withdraw the money by filing a petition. However, withdrawal of coins is out of the question, as it is impossible to find out who the owners of crypto wallets are. Therefore, it is necessary to be extremely careful in the transfer process.
After creating the private key (wallet key), it definitely needs to be saved somewhere. Since the first day of the cryptocurrency market, many people have lost their assets because they did not save their wallet code or because they lost it. Therefore, when you receive the wallet code, do not only trust the platform but also save it on a piece of paper. When you lose or forget your wallet address, you lose all access and cannot regain access, as there is no intermediary. That’s why it’s so important to keep your wallet addresses in a secure environment.
What are the types of cryptocurrency wallets?
The software wallet used in crypto money trading is a digital wallet where you can prove the existence of your money and allow you to easily transact while making transactions. Like other wallets, digital wallets also have special codes. That is, the wallet code is personal and cannot be changed.
Mobile devices, one of the wallet types frequently used by crypto money investors, work with a logic similar to desktop wallets. However, as it can be understood from being mobile, these wallets work with smartphones or mobile devices. To give an example of these wallets that provide money transfer via QR code, Trust Wallet (Binance application) can be given as an example. Mobile wallets that operate online, such as desktop wallets, need to be saved elsewhere in order to be able to use them securely, in case the wallet code is stolen or lost.
Desktop wallets are a type of wallet that you can use by downloading a program to your computer. You can access desktop wallets, which you can use by installing them on any computer, only through the computer from which you downloaded the program. Desktop wallets are safe, but you also risk losing your entire available balance if your computer is hacked or infected by a third party. In addition, when the desktop wallet is created, a file named “wallet.dat” is added to the hard disk of the computer. This file is a special file that gives you access to your desktop wallet.
If the desktop wallet is encrypted when it is created, the password must be entered for each transfer or transaction. In fact, although it is one of the reliable crypto money wallet types, it is necessary to state that it is not very reliable in cases such as loss or forgetting the password, and in addition, it should be said that the password must be saved in another place to make it reliable. However, since it is recorded specifically for the computer, if your computer is stolen or corrupted, you may lose all of your property.
Hardware wallets are offline wallets that can be stored with physical tools. Hardware wallets, which can be used via a USB, carry out transactions made by investors online. But storing your current balance offline and away from the online environment prevents you from becoming an open target for attacks and virus infection.
Hardware wallets are wallets protected by encryption. This shows that it is very difficult for them to access your wallet when you lose or steal the physical vehicle in which you keep your wallet. Because it is not possible to access your physical vehicle without decrypting it. In addition, when you have your hardware wallet stolen, you can transfer your data to a different hardware wallet with the word groups you have previously determined and regain access. Hardware wallets with recoverability are more advantageous in terms of access and security than other wallets.
Web wallets are wallets that you can access through websites (exchange platforms) specially established for the crypto money system. Using a web wallet means you give full control to the site. When you use a web wallet, the data of your assets is not on the website. Websites act as an “interface” between the Blockchain system and users.
The most common method of fraud in web wallets is to set up fake websites. In this method, which is usually one of the methods used by crypto money fraudsters, the domain name of a popular stock exchange platform is created by imitating it. In addition, one of the situations that put web wallets at risk is attacks on the exchange site. It is known that investors have lost their assets as a result of many such cases.
Which cryptocurrency wallet should you choose?
Keep these things in mind while choosing a wallet:
- When choosing a wallet, it should be checked whether it provides a multi-signature advantage or not.
- It should be checked on which platform it is traded and whether those platforms are reliable or not should be investigated in detail.
- When choosing a crypto wallet, it should be checked whether it has open-source code.
- Pay attention to the cryptocurrencies it supports.
- If the wallet you prefer to use has the ability to transact on many altcoins, there is no need to use a different wallet for each coin. If you want your preferred wallets to deal with more than one coin, you can choose the following wallets: Bread, Atomic, Jaxx, Exodus wallet.
- For investors who prefer to use only Bitcoin (BTC) wallets, they can take a look at Electrum, blockchain-info, Mycelium wallets.
- Copay and Bread wallets are convenient in terms of convenience if you are just getting started in the cryptocurrency market and are going to have a wallet for the first time. But if you are a more experienced cryptocurrency user, Armory and Mycelium can also be among your choices.
Cold vs hot wallet
Cold and hot wallets used in crypto money trading and transfer transactions have some special benefits and some risks. While hot wallets are more suitable for instant transactions made by investors due to their easier and faster use, cold wallets are more difficult to use and cold wallets are not a suitable storage method for instant transactions.
Cold wallets are safer to use compared to hot wallets, as they are a type of wallet that is not used online and physical confirmation is required for any transaction to be made. In addition to all these features, cold wallets provide a higher security measure than hot wallets, even if they become an obvious target when used with an internet-connected device.
In cold wallet use, wallet owners do not need to use a device connected to the internet. Cold wallet users must have a physical tool to store them, as they cannot use them on the internet. Using a cold wallet is safer than using a hot wallet. Because cold wallets are not under the influence of cyber attacks because they are far from the online environment. This makes investors more protected from online cyberattack attempts. The use of cold wallets is also called cold storage and is generally more useful for long-term investors or “HODLers”.