What Makes a Secure Crypto Wallet?
There are so-called hot wallets and cold wallets. Hot wallets are connected to the internet,
while cold wallets do not have one. Without an internet connection, the risk of a hacker attack
naturally decreases. In addition, each wallet has an individual key, which is used for
identification on the blockchain. This key should be created using a strong random number
generator whose allocation model is not predictable. This makes it harder for hackers to
launch attacks on the secret key.
Is Exchange Wallets Safe?
Crypto exchanges are plentiful these days. The best known include Coinbase, Binance, and Crypto.com.
No separate wallet is required to buy and trade cryptocurrencies on these exchanges. As a customer, you create an account that you load with euros or other fiat currencies in order to buy cryptocurrencies.
The wallet is included in the account. The advantage of this solution is that it is quite simple and the purchased coins and tokens can be exchanged for real currencies at any time.
However, with this method, there is a risk that the exchange will be hacked and the cryptocurrencies will be stolen.
In any case, you should have one for your account Use two-factor authentication.
Create Wallets For Specific Coins
Some cryptocurrencies offer their very own wallets that can be downloaded and used to store coins.
Some examples are Daedalus for Cardano, NEON Wallet for NEO, or the Avalanche Wallet for Avalanche.
First, see if the coin you want to buy has its own wallet. This should be the case for many coins.
Then all you have to do is install and set up the appropriate wallet software. A good antivirus program
can reduce the risk of malware and other attacks on the wallet.
The disadvantage of these wallets is that they can only be used for a specific coin.
Online Wallets
An online wallet such as MyEthereum , Metamask, or Exodus allows access to your own cryptocurrencies from
anywhere and can be used to exchange, send and buy different coins and tokens. With the help of these wallets,
the blockchain can be accessed via various websites. The application only has to be loaded onto the PC or
smartphone. A password for the personal wallet and a backup key is then created. The wallet can be restored
with the backup key, so the phrase should be noted and kept in a safe place.
Hardware Wallets
A hardware wallet is comparable to a USB stick and is used to store coins without an internet connection.
It is considered the safest way to store the purchased coins as hackers cannot access them even when the wallet is connected to the PC.
The most popular models include the Ledger Nano X ( DISPLAY ) and the Ledger Nano S ( DISPLAY ).
The device is simply connected to the PC and then gives you the necessary installation steps.
In principle, only a PIN has to be assigned, for which you are then assigned a recovery phrase of 12 to 24 words.
This phrase should be noted and kept safe. If a device is broken or lost, you can order a new wallet and restore your coins with the phrase.
For newbies, using a hardware wallet can be a bit complicated. If you want to understand how to set up
a hardware wallet, you will find good instructions for the Ledger Nano S in youtube videos.
Paper Wallet For Bitcoin And Ethereum
So-called paper wallets can also be created for Bitcoin and Ethereum. As the name suggests,
the private and public key for the respective blockchain is printed on a piece of paper.
For Bitcoin, for example, wallets can be created via bitaddress.org or walletgenerator.net websites
and then printed out on paper.
A paper wallet for Ethereum, on the other hand, can be created
via the myetherwallet.com website. Although this method does not require an internet connection and
is therefore quite secure, there is still a risk of losing the paper wallet. In addition,
handling newcomers is quite complicated.
Protect Wallets WIith Encryption And Two-Factor Authentication
No matter which provider you keep your wallet with – make sure that it is on secure online servers.
In addition, you should always use two-factor authentication. You have to verify yourself
in two different ways – for example, PIN/password and fingerprint or face recognition or confirmation via an app.
In general, it is advisable to encrypt the wallet. Use a secure password that consists of at least
16 characters. The password should consist of lower and upper case letters, numbers, and special characters.
A strong password offers some protection against thieves, but it also cannot do anything against
keylogging hardware or software.
Important: Don’t forget the password. If you can’t remember it, write it down on a piece of paper
and keep it in a safe place, like a safe. Never put the note with the password in your wallet!
