If you own or plan on starting to invest in cryptocurrency, you may have done some research indicating that you should protect your valuables as no bank will do it for you. And that’s what we’ll be taking a look at today.
How many different options are available, what types of Wallets there are and more importantly, we will help you get away from all the power outages Blockchain has suffered in the recent years.
First of all, here’s what you shouldn’t do. Don’t manually store your keys in a piece of paper, even if you’re gonna lock it in a safe. You can lose it, it can deteriorate, you may spill water on it, you might get stolen. The fear people have about the security of storage devices and apps is the most interesting paradox about cryptocurrency. The idea behind crypto is protecting your transactions and your identity from governments and banks but the fear of getting hacked instead of being tracked by said institutions still invites the users into storing your cash in the least secure ways possible. And yes, you can’t call the police if your crypto is stolen, but using pen and paper won’t fully protect you from that either.
Another couple sentences should be added regarding Blockchain.info. Their main problem is accessibility. Every transaction you make on Blockchain has to go through their own servers and not only have they had several power outages in the past few years, they constantly have server issues. Not being able to give use to your currencies whenever you want to or need to should be a major turn off when deciding which wallet to use, even when their security is so great.
So let’s cut to the chase, the three most secured ways to store your “online cash” aren’t free, because they are all hardware devices that you have to order. The investment will be worth it though and none of the three costs more than 1% of Bitcoin, maybe they will at the end of this article, the market has been that wild! This is what you call “cold storage” or offline storage, meaning that it is stored disconnected from the internet, protected from all hackers and malware that can be thrown out at your pc.
The three options for hardware wallets are Ledger, Trezor and KeepKey.
Ledger: The Ledger Nano S is the coolest looking one if you’re into having a cool designed hardware Bitcoin wallet which is probably not a thing since the last thing you want is to show it off to anyone. In terms of specifics, it only works with Google Chrome and it is PIN protected. If you miss your PIN three times in a row, the device wipes itself clean. Don’t worry, you can set a backup seed up. The password to retrieve the backup is then a set of words that you have to enter in a specific order. Additionally to Bitcoin, Ledger stores Ethereum and Ethereum Classic and that’s huge since Ethereum already is less than halfway behind in valuation to Bitcoin.
Trezor: This wallet has some unique features. You can sign transactions with it without being connected to the internet, making it incredibly safe. It’s also the most expensive one for good reason. It also has no account linked to the device, so it can’t be hacked by stealing your identity, you actually have to be mugged off it for someone to have access. Even if you do get robbed, there will be a passphrase required to use your bitcoins. It is obviously advised that you memorize and never ever write it down. Trezor offers the same option as Ledger in terms of also storing your Ethereum.
Keepkey: Here’s the first wallet that lets you store a bunch of other alternative coins as well as Bitcoin. Litecoin, Dogecoin, Namecoin, Testnet, Ethereum, and Dash can be kept in this key and this is definitely the direction the hardware storage technology will be moving. When this article was written there were 35 currencies whose total market cap exceeded one billion dollars in valuation. It is also as secure as Trezor and Ledger so it’s worth being given a consideration if you have a large part of your Portfolio invested in the aforementioned currencies.
The last part of this article takes a quick look at the online wallets available. Logically these are slightly less secure than “cold storage” because they can get hacked, however these sites also do “cold storage” on their own, as you will read right on the first on the list:
Coinbase: The most famous exchange and wallet in the world of crypto, the one that attracts the most novice players into the trading game. For this reason, it is also the site that is more targeted by hackers. The good counter to the argument is that your digital funds are insured, and you get everything back that you lost if the platform gets attacked. The bad news is that it doesn’t cover any attack or identity theft on an individual level. If someone finds your password, the insurance won’t cover for it.
The last feature we’re going to look at from Coinbase is the Multisignature Vault, a better way to store large quantities of Bitcoin. They give a 2 of 3 key, meaning that you own one, they own another and the last one is shared. To retrieve funds from the vault takes any 2 of the 3 keys. Yes, that means the company has the power to shut your access to the vault down at any point, however, they also have a 48-hour period to process any withdrawals from there, meaning that if you get hacked, you have 48 hours to cancel the faulty movement.
Exodus: This is basically Keepkey as an online storage. You can save Bitcoin, Litecoin, Dogecoin, Ethereum, and Dash on Exodus and trade between them on the platform. It has a great interface but the downside is that it has no desktop or mobile app, which means every single transaction is made on the web, making it way riskier than others.
Jaxx: Just like Exodus, you can store a bunch of altcoins on Jaxx such as Bitcoin, Litecoin, Zcash, RSK, Augur, Dash, and both Ethereum and Ethereum Classic, and yes, you can also exchange between them. Just like most of the platforms in this category, only working online means less safety than a hardware device.
Airbitz: We’re finishing it off with Airbitz, a highly secured decentralized app, meaning that not even they can access your Bitcoin. The coolest feature it offers comparing to others is the list of sites (online and offline) where you can actually spend your currency.
In conclusion, we advise new users to start off with an online wallet that also works as a trading platform for Bitcoin, it will help you learn faster and it is very novice-friendly. If your investments are successful, you should totally get in on the hardware storage. The added security they bring and the ability to have your cryptocurrency disconnected from the internet has to be invaluable for you at that point. Please never store it on your own in documents or pieces of paper. The biggest security threat to your Bitcoin is yourself. You can lose it, drop it, be clumsy, get drunk and say too much, get tricked by a stranger or a fake address. Remember that you will only be protected if you are careful.