Cryptocurrency enthusiasts have a higher level of responsibility when it comes to managing their funds than those investing in a traditional financial market would. Aside from choosing the right projects and making sure your ICO investment is legitimate, it will also be up to you to manage your assets appropriately. That means storing your funds safely, and for that, you’ll need an adequate cryptocurrency wallet.
For most investors, a standard option will suffice, but a permanently live wallet is not the best option. There are many ways where scammers can steal your passwords or keys. This is especially prevalent when using an exchange for storing coins or even a web storage option.
One of the main issues with web storage is that it uses a domain name for access, and this is a prime target for scammers to utilize for phishing scams. You should be wary of any messages you get asking for your passwords or information, these are all attempts to steal your passwords and your funds right out from under you.
Though client or app-based wallets are not without their own downfalls. While it is less common than thefts through other means, it is possible for hackers to take your funds by using malware which cracks your encryption password. This is because all of these are “hot wallets”.
A hot wallet is constantly live to the internet, and that leaves it open to attack from malicious software. If you are running a client program, then it’s important to keep your computer’s anti-virus software up to date. Perform frequent scans to make sure that there are no malicious softwares installed and be careful about the sites you visit.
If you have a significantly sized investment then you may be interested in storing your funds in a much safer cold storage option. These wallets are on kept external devices, and they are not live on the web in any way. This makes them much safer options for any cryptocurrency enthusiast to utilize because it eliminates the chance of your funds being stolen. That makes these wallets a great option for anyone making a sizeable long-term investment that they would like to stow away for the long term.
The most popular of these options is called a hardware wallet. While there has always been the option of paper wallets which holders could print out, but in recent years these new devices have become more popular. The reason is that they offer much more functionality. For starters, you can actually store multiple currencies on most of them, and if you don’t want to keep up with a bunch of paper wallets, then this is an excellent choice.
A hardware wallet will also include the ability for you to create an easy recovery phrase. This means that if you were to lose or damage your machine that you’ll be able to get access to your money on a new device. This is superior to the paper storage method as you would have no ability to recover the funds should that piece of paper be destroyed.
Paper storage methods also have no security features, and if anyone were to find it and know what it was, they could easily steal your coins. Conversely, hardware storage options will permit you to choose a pin number to restrict who can use your funds.
There are a few major varieties of hardware wallets, and whichever one you choose will largely be based on the types of assets that you want to hold in it. Each one has its own advantages and disadvantages, and you should take a moment to explore each option before coming to a decision.
This is one of the most frequent choices when it comes to cryptocurrency hardware wallets. It offers a very simple yet secure device which is secured using a pin code. All transactions must be verified with a button press on the device itself which protects you from transactions not coming directly from you. This essentially works as its own 2 factor authentication. Investors who choose this device should make sure that they set a pin code that they will remember.
Part of the security features for this device include wiping its contents after a certain number of incorrect attempts! This device also stores a wide variety of cryptocurrencies including Ripple, Litecoin, Bitcoin, Ethereum, Neo and many others. It does, however, have to be managed through the matching Chrome add-on which many find irritating to use.
The Trezor offers crypto enthusiasts a wide variety of features including pin code protection. The device does not store the code, which means it can’t be taken from you even if your computer is harboring compromised software. The optional two factor for this device revolves around limited use passwords which can be utilized for maximum protection when protecting your trades.
These particular wallets do give extra data with which to manage your investments when using their own Chrome application if you’re interested in that. However, the functions seem a bit clunky, and it is likely not the easiest option to use. Trezor supports a generous amount of cryptocurrencies including Doge, Ethereum, Bitcoin, Dash, and tons of ERC20 tokens.
A lesser known option, but possibly one of the nicest ones. This one tends to be more expensive, but it makes up for it in extra features. This unit features a very large LCD screen and simpler operation than the other two. If you enjoy the slick interfaces and ease of use offered by Apple devices, then this device is likely for you.
It also includes a very durable and nice looking all metal frame. Users of this wallet will be able to utilize security features such as recovery phrases, hidden wallets, manual transaction confirmations, and superb ease of use features that will make it the easiest to use of all three options.
The list of currently supported coins here is a little smaller, but KeepKey will soon be rolling out native ERC20 token support. This is important because usually, these wallets have to work in conjunction with MEW to offer this. MEW is a hot wallet, and that’s obviously not ideal. It adds a possible means of your funds being stolen, and adding this could very well put them above other options on the list.
This particular wallet also offers some cool features that will allow you to make one-click purchases from merchants who accept Bitcoin without ever plugging in your wallet. By using these features you can keep a greater portion of your cash in cold storage.
If your wallet is lost, stolen or destroyed you can regain access to it with the use of your seed phrase that you made upon booting it up. You may need to purchase a new hardware wallet, and when you boot up the machine it will prompt you to input this recovery phrase.
Keep in mind that this will not wipe your pin number. That means it’s just important for you to remember this as it is for you to preserve your seed phrase. Without both of these items, you will not be able to gain access to your funds. Therefore, it’s important to protect these items by any means necessary.
As an investor, it’s important to research all the options when it comes to properly storing your money. If you’re new to the world of cryptocurrency, then it’s important to remember that there are no insurance policies here. If your funds are stolen then there is no one to return them to you.
This is a lot of responsibility, but with that responsibility comes a greater degree of freedom. That freedom allows us to transact and manage our assets in the way we see fit. When choosing to purchase a hardware wallet, you know that you are putting your safety first.
If you own a decent cryptocurrency nest egg, then tucking away at least a portion of it on a hardware storage device is certainly a good idea. Even if you do need funds to trade with this will protect the bulk of your capital on a safe device. It’s important to remember that these devices are not foolproof.
They are electronics, and electronics can fail suddenly and without warning. So it’s important that you immediately back up your seed phrase that is given to you when you first make your wallet. You’ll need to stow this away in a secure place. Possibly in a safe or even a safety deposit box in case of disaster.
If you have a family member or friend which you greatly trust, then you could perhaps keep a copy with them as well. You should be careful, however, because this would allow an untrustworthy person to get access to your money on a new device.