The Best Cryptocurrency Wallets Options 2018
It has been quite the rollercoaster year for the cryptocurrency market in general. With the huge sure in market prices approaching the end of last year, 2018 has endured a rocky start. Every currency in the market, from Bitcoin through to the stacks of Alt-Coins have endured a turbulent time in the last couple of months. However, as things start to pick-up traction once again, the importance of one aspect of being a crypto-investor has never wavered. Security.
Security of you investment in the sector means doing everything you can to ensure its safe-keeping. The most vital place to start when trying to keep your cryptocurrency safe is choosing the right wallet options for you.
With that in mind, we have put together a comprehensive rundown of the varied cryptocurrency wallet choices you can make. This includes both wallet types, and the most popular storage providers in the cryptocurrency wallet industry.
One elementary mistake which new and even seasoned investors in the space make is not storing their holdings properly. By using this guide as your reference point, you will be in the best possible position to ensure the long-term security of your valuable cryptocurrency holdings.
Types of Cryptocurrency Wallet Available
This is an area which we can divide into many categories, however, the first important thing you must learn to differentiate is the difference between a “Hot Wallet” and a “Cold Wallet”. Here is a brief explanation of what these are more specifically.
A hot wallet is essentially any wallet which you use to store your cryptocurrency where this wallet is also connected to the internet in some manner. This absolutely includes all online wallets used for storing your crypto and also the vast majority of desktop and mobile wallets and application. Unless these devices have never been connected to the internet which is highly unlikely these days, they are referred to as hot wallets. Very briefly, a hot wallet is considered to be more vulnerable due to the possibility of unauthorized access and data loss. There are various types of hot wallet which we will explain more in depth later.
Oppositely, a cold wallet is one which has never been connected to the internet or any external networks. These would include all paper wallets as well as hardware device wallets such as those from Ledger and Trezor. Cold wallets are certainly considered the most secure. They do have drawbacks which we will examine more closely later though.
Which Type of Wallet to Choose
When it comes to exactly which type of wallet choice to make, you may think that safer is always the best choice. This however depends on a number of portfolio related factors. Certainly, the cold storage options of hardware and paper are the most secure. However, these provide for poor access to your cryptocurrency. If you want to trade frequently or even often with your balance, then you should strike a middle point where you have some of your currencies totally secured but have enough access to make important trading moves with at least some of your balances.
Here we will outline some of the features and drawbacks of each wallet type and some popular services within the cryptocurrency sphere which provide each type of wallet service.
Online wallets are easily the most accessible method of storage for your cryptocurrency. They are easy to use and a good place for holding a small number of coins or currencies which you may wish to trade quickly.
Coinbase and GreenAddress are two which offer these kind of services. Coinbase is connected to its hugely popular exchange which many entrants in the market use to purchase Bitcoin for the first time. Here you will find convenient and secure storage for some of the major cryptocurrencies including Bitcoin, Ethereum, and Bitcoin Cash.
With Coinbase as with most online wallets, it is merely a small step up from storing your holdings on an exchange, which is not recommended. Coinbase is in control of the private keys for this wallet at all times and if it goes down or blocks your account, you may lose access to your funds. They do however provide a more advanced security alterative in their multisig wallet.
The multisig wallet operates on a three-key basis. One key to the platform (Coinbase), one key to the user and one key which is shared. This means that you can regain control over your holdings even if the site goes down.
As online wallets go, these are two of the most secure and popular, although GreenAddress only caters for Bitcoin holders. Even so, they are still not recommended for holding large amounts of cryptocurrency over extended periods.
Very similar to web-based wallets, desktop wallets offer you an extra layer of security. This extra level of security comes from the fact that they store your private key on your desktop. This fact alone greatly increases your security as you have access and control over your own private keys.
One thing which you must ensure however is that the computer you are using is not infected with any malware. This is a huge challenge in itself given how much time we sped online and thus, makes a desktop wallet quite vulnerable.
One of the original and still most trusted desktop wallets you can use is Electrum. Although its user interface is less than friendly, it provides you with a robust and secure method of managing your Bitcoin from your desktop. One of its main advantages is its open-source nature. This reduces the amount of malicious code to almost non-existent and makes the system very transparent. It is available for Mac, Windows and Linux.
If you are holding a variety of Alt-coins and in need of a more user-friendly experience, Exodus is another excellent choice in the genre of desktop cryptocurrency wallets. It caters for Ethereum, Litecoin, Dash, and many more.
Let’s not kid ourselves, the vast majority of users will be seeking ultra-portability along with premium-grade security. This has led to the rapid development of mobile wallets. These are quite less secure than a desktop wallet purely in the sense that they are easier to lose or have a risk of being stolen more than your desktop. These risks are mitigated however by portability and convenience, important tenants of any business in 2018.
One of the most popular mobile wallets available no both Android and iOS platforms is certainly JAXX. It has some unique features for a mobile wallet which help to improve the security of your holdings. These include, not storing your private keys on the JAXX server but only on your local device. Furthermore, they cannot see your coin balances.
These are positive points but it is vitally important that you keep a secure note of both your keys and your backup phrase in order to restore your balances in the event of losing your device. JAXX is also very user-friendly and incorporates shapeshifter technology which allows you to instantly swap your holdings into another coin.
Increasing the security levels to high are hardware wallets. These are external devices, usually connected by USB which store all of your cryptocurrency sensitive information such as holdings and private keys. The two main competitors in this field are the Ledger Nano S and Trezor.
Performing a transaction with a Ledger Nano is a multi-step process. You should connect the hardware wallet to your computer, but you should also be required to enter your pin number on the device and confirm any transactions by pushing the device button for completion. These added security measures mean that even if your computer is compromised by malware, it will be of no negative impact since the device button should also be pressed. Furthermore, if the device is lost or stolen, several incorrect attempts at inputting a pin number will result in erasing the devices sensitive information.
All information you store on the device itself is kept on the internal smartcard microchip and are never seen or accessed at any time by Nano or third-parties.
Undoubtedly the most secure way to keep your cryptocurrency is by using a paper-based wallet. This is exactly what it says and is a written record of all your sensate cryptocurrency information. This usually means both your public and private keys. These balances can be checked at any time on blockchain.info and are by far the most secure method of storing your personal keys. This is of course presuming there will be no incident such as a fire or flood. WalletGenerator offers a safe and secure way of producing your paper wallet addresses.
Tips for Keeping Your Wallet Secure
Of course having the most secure wallet you can find is a fantastic start. This only matters though if you follow the best practice to keep your wallet secure. Here are a few essential tips on doing just that.
- No Exchanges- Never keep your holdings on an exchange. Even for a short time if you can help it. They may not seem so, but they are vulnerable and regularly fall victim to hacking and targeted attacks.
- Backup Your Wallet- Unexpected scenarios do happen. This is why you should always store copies of your keys and backup phrases in paper format, often more than one time if you can. Keep these in a secure location so if you lose access to your wallet for any reason, it can be easily restored.
- Try to Use a Different Browser- This is one which people often neglect. Many times, malware embedded into our browser can track everything from our page viewing to keystrokes. This represents great danger for your crypto holdings. If possible, try to use a browser you know is clean or even an entirely different device for cryptocurrency only if it’s feasible.
- Keep Your Keys Safe- This goes without saying, you should keep your private keys safely stored and out of the reach of prying eyes at all times. You simply never know when someone may be shoulder surfing. This often happens when you least expect it and of course, NEVER give out your private key to anyone for any reason. This applies both online and offline. If you do so, you may pretty much wave goodbye to your crypto haul with minimal or no recourse.
Nothing is foolproof and everyone makes mistakes here and there. Investing in cryptocurrency is no different. It is highly likely that you will slip-up here and there when it comes to matters of security and storage. It happens to everybody, including the experts!
The key is that you recognize these mistakes and learn how to improve upon them. Whilst this guide in no way provides a guaranteed path to total security, following the advice and useful tips here can greatly reduce your chances of suffering a cryptocurrency security breach. Stay safe!
-The views expressed in this piece are merely opinions of the author and are not in any way intended as financial advice. Every investment decision you make is at your own risk. Do not invest more than you can afford to lose.-