The Types Of Crypto Wallets – How To Choose?

Safeguarding one’s assets from harmful attacks is an essential activity. Assets can be of any kind. Gone are the days when assets only meant currency notes, gold or property. Today, assets can also be in the form of cryptocurrencies. With developments in new kinds of assets, there is also a growing number of malicious sources who want to get hold of the assets that do not belong to them.

Cryptocurrencies can be profitable when the user understands the depths of its mechanism. However, it is a virtual currency. As it is not a physical entity like money or gold, would it make sense to follow the same safety precautions that we take for traditional assets?

What are the risks?

In the cryptocurrency world, assets include tokens exchanged through transactions, and rewards won by mining coins or validating blocks. Generally, the user stores these assets online. Online, the cryptocurrency exists at the exchange platform where it was purchased.

While dealing with cryptocurrencies, the single most important element is the user’s private key. This key must not be shared with anyone under any circumstances. However, when the user leaves their assets on the exchange platform, they are essentially expecting the platform to keep their assets and private key safe.

Thus, the private key is not only exposed, even the assets are prone to misuse. When it comes to safety and security, one must be extra careful in the online world. If one would not trust their money or other possessions with a third-party, then they can certainly not expect their crypto assets to be safe on the exchange platform.

The types of wallets

To help crypto investors take charge of their safety, different companies have come up with different types of wallets.

  • The software/web wallet – Web wallets require the user to create an account where they can safely store their private key and other information needed for transactions. However, it is common knowledge that any software is prone to attacks.
  • The paper wallet – The simplest way is to print out the critical information on a piece of paper and store it safely. But it is not an efficient method as the user needs to manually type the private key every time they participate in a transaction.
  • Hardware wallet – This is the best option and provides advanced features for safety. A hardware wallet stores the private key in a chip that protects the key from attacks. Also, a private key stored in a hardware wallet is isolated from all devices that could possibly face attacks.

The bottom line

More people have started to 다운로드 ledger wallet as they have started realising the importance of storing the private key in a place where security is not compromised.

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