There exists various types of cryptocurrency wallets to allow users store and access their digital currencies in different ways. The question that is relevant in this context is how far are these wallets secure. Before taking up the security aspect, it is helpful to understand the various types or varieties of cryptocurrency wallets that exist today.
These wallets can broadly be classified in 3 categories:
2-Hardware wallets and
Cryptocurrency software wallets can again be sub-divided into desktop, online and mobile wallets.
Desktop software wallets: These wallets are meant to be downloaded and installed on desktop PCs and laptops. This particular variety offers the highest level of security though their accessibility is limited only to the computer in which they are installed. Moreover, in case, if the computer gets hacked or is virus-infected, there's a possibility that one may lose all his or her money.
Online software wallets: This range of cryptocurrency wallets run on the Cloud. Thus, they can easily be accessed from any computing device and from any geographical location. Apart from accessibility convenience, this type of digital wallets store the private keys online. The keys are even controlled by third-parties; this makes them easily vulnerable to hacking and theft.
Mobile software wallets: Unlike the two other varieties, mobile software wallets run on smartphones through an app. These can easily be used everywhere, including retail stores and malls. This range of the wallets is usually much simpler and smaller compared to the normal desktop ones to accommodate with the very limited space on mobile handsets.
Difference between hardware and software wallets
Hardware digital wallets vary from the software ones on the aspect of storing a user's private keys. The hardware wallets store the user keys in a hardware device (for example, the USB). Thus, as the keys are stored offline, these wallets offer an added security. Moreover, hardware wallets are easily compatible with many online interfaces and can also handle different currencies. This variety of cryptocurrency wallets is also easy to make transactions with. As a user, you just need to plug in the device to any computer, which is connected to the web before entering a PIN, transfer the currency and just confirm the transaction. Your digital currency is kept offline by the hardware wallets and thus, the risk factor or security concern is also much lesser.
Paper digital wallets: This range of digital wallets is also user-friendly and ensures a high-level of security. The term "paper wallet" just refers to the hardcopy printout of a user's both public and private keys. However, considering the instances, it can also refer to a software application meant to generate the keys securely before printing.
Sweeping with paper wallets
Using paper wallets is relatively somewhat easier. In order to transfer any cryptocurrency to your paper wallet, just transfer the funds from the software wallet to the public address, which your paper wallet displays. Similarly, when you want to spend or withdraw your money, just transfer the funds from the paper wallet to your software wallet. This procedure is popularly referred to as 'sweeping'.Sweeping can be done either manually, ledger nano s vs x by entering the private keys or scanning the QR code on a paper wallet.
How secure cryptocurrency wallets are?
Different varieties of digital wallets offer different levels of security. The security aspect mainly depends on two factors:
1-The type of wallet you use - hardware, paper, online, desktop or mobile
2-A chosen service provider
It doesn't require mentioning, it is much safer to keep the currencies in offline environment, as compared to online. There's just no way to ignore the security measures, irrespective of the wallet one has chosen. If you lose your private keys, all the money kept in the wallet will be gone away from your hands. On the other hand, if the wallet gets hacked or you transfer funds to a scammer, it won't be possible to reverse the transaction nor reclaim that money.Investing in cryptocurrency is a smart business idea and for that, using a suitable wallet is inevitable. You just need to be bit cautious to ensure safety and security aspect to your fund transfers and transactions.
Crypto-currency as a modern form of the digital asset has received a worldwide acclaim for easy and faster financial transactions and its awareness among people have allowed them to take more interest in the field thus opening up new and advanced ways of making payments. With the growing demand of this global phenomenon more,new traders and business owners are now willing to invest in this currency platform despite its fluctuating prices however it is quite difficult to choose the best one when the market is full. In the list of crypto-currencies bit-coins is one of the oldest and more popular for the last few years. It is basically used for trading goods and services and has become the part of the so-called computerized block-chain system allowing anyone to use it thus increasing the craze among the public.
Common people who are willing to purchase BTC can use an online wallet system for buying them safely in exchange of cash or credit cards and in a comfortable way from the thousands of BTC foundations around the world and keep them as assets for the future. Due to its popularity, many corporate investors are now accepting them as cross-border payments and the rise is unstoppable. With the advent of the internet and mobile devices, information gathering has become quite easy as a result the BTC financial transactions are accessible and its price is set in accordance with people's choice and preferences thus leading to a profitable investment.