Cryptocurrency has no physical shell. In fact, data on the balance of users are stored in millions of chains of blocks. If a user has access to a crypto-currency purse, he can only add new entries to this chain by sending and taking coins from other users of the system. Accordingly, to get the opportunity to keep money in the “crypt”, you need a special purse. In this article we will talk about different types of wallets, their advantages and disadvantages.
Fast and slow wallets
All wallets can be divided into two main categories – fast (hot) and slow (cold). Fast ones allow you to transfer and accept money almost instantly, but to the detriment of security. Slow, accordingly, work not so brightly, but they are much better protected. Fast and slow wallets are different way of storing information. The first store a chain of records in the cloud, and the second – on the physical media of the owner of the wallet.
In a hot wallet, when a user sends or receives money, the chain is updated on a remote server. In the cold, the whole database is downloaded and unloaded by the user. For example, in the case of bitcoin, you need to download more than 100 GB. This is long, and in some cases (for example, in purses for a mobile phone) is impossible. But thanks to the fact that no one except the wallet owner has access to the chain of blocks, the risks of losing their money are significantly less.
Since mobile applications work on the principle of online purse, the security of this method of storage leaves much to be desired. In fact, the user has to rely on the decency and competence of the developer of a mobile application or service.
The level of cryptographic protection is at a low level even if the program is downloaded from the official application store. As practice shows, wallets for mobile phones are hacked more often than others.
Most developers try to make the application as convenient as possible, but the security of software and server code is not paid much attention. In practice, more than 80% of wallets for portable gadgets have vulnerabilities of small and medium risk.
Desktop application or offline module
Local wallets for desktop systems are the most secure, but for their use it is often necessary to have a lot of free disk space and high-speed Internet. If the problem with the disk can be solved by expanding the memory or transferring the purse files to the USB flash drive (or a separate module), then there may be problems with the Internet. In the direction of desktop wallets you can watch if you have access to at least an Internet channel of 100 Mb. The more, the better.
Using a desktop purse, do not forget about precautions that will help not to lose your money:
- Availability of a licensed antivirus with up-to-date databases;
- Download only the licensed licensed software from official sites;
- Use a separate e-mail on a reliable server (at least Gmail);
- Minimum amount of extraneous software;
- On unverified sites, you only need to access from another computer or another (parallel) system. It is desirable that this is a Linux-based system.
Remember that even the most secure wallet can be cracked with malicious software. To avoid this, carefully monitor what you are installing on your working machine. Ideal – do not install anything and do not sit on the Internet from the computer where the purse is installed.
The security of the online wallet is 100% dependent on the owner of the service, which provides crypto-currency storage services. If the platform is reliable, you can count on the safety of your money, subject to compliance with safety procedures (all the same as for the offline purse). But in the safety of money you can never be 100% sure.
Even serious companies with a reputation are not immune from force majeure. For example, if the data center where the service leases dedicated servers will burn, then your bitcoins will burn with it. And you can not do anything about it. On the other hand, your own computer is also immune from irreparable damage. If your SSD, on which the purse data is recorded, will fail, you will lose your money.
Example of a reliable online wallet
An example of a reliable wallet with a set of additional functions for more convenient work with crypto currency is the Hodly service. The platform has several advantages that favorably outline it against the background of other online purses:
- Instant purchase of cryptocurrency;
- Payment by card;
- Verification is not required to purchase coins;
- 2-step verification;
- Mobile applications for quick access to your wallet;
- User-friendly web interface.
Hodly – an indispensable thing when you need to buy a crypto currency quickly. You do not need to confirm your identity for the purchase of coins, you do not need to wait for moderation and consideration of the application, you do not need to use third-party exchangers, losing money for conversion. If you need mobility and reliable (as far as possible) online storage, pay attention to this service.
Alternative version of online wallet
In addition to classic online purses, crypto-currencies can be stored in the local currency of various services and payment systems. There are dozens of such sites, so it does not make sense to list them. A typical example is the IQ Option platform. This service can not be considered a classic online purse, but you can store cryptocurrency coins in it. You simply put on balance any amount of money (in dollars) and buy for them cryptonyms. After that, the corresponding assets will appear in the portfolio. Very convenient, fast and reliable. Suitable for both long-term investments and for trading.
Now you know enough information about how you can store cryptocurrency. Compare the pros and cons of each method and choose the option that suits your needs.
NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future
GENERAL RISK WARNING