After I got used with all the crypto lingo, the next thing i stumbled upon in crypto space was security. There are different aspects of security involving cryptocurrencies that can be discussed. However, today I will focus on the types of wallets available out there, their level of security and how to store your coins safely.
But before we dig into the details, let`s think for a second why security is important on the blockchain and why do you need to care about it.
Why should I care about the security?
Blockchain is a technology facilitates peer to peer transactions by cutting out the middleman and also provides a provides a protocol where entities can trust without knowing each other. This means that you will benefit of a fast and secure protocol that facilitates the transactions between you and another party without relying on intermediaries such as Banks, Paypal etc. It also means that there is no customer support where to call because your wallet was stolen, lost or you forgot your password, which puts all the responsibility in your hands - reason why it is important to take all the necessary steps to stay safe.
2 Factor Authenticator
While this is definitely not a wallet, i have chosen to talk about it here as it adds an extra layer of security to your exchange trading accounts. So far I haven't met any exchange yet that doesn't have 2FA as an option.
Two Factor Authentication, also known as 2FA, two step verification or TFA (as an acronym), is an extra layer of security that is known as "multi factor authentication" which requires not only a password and username but also something that only, and only, that user has on them, i.e. a piece of information only they should know or have immediately to hand - such as a physical token. This is very useful in order to keep your account safe and your funds secure so please do not use your trading accounts without 2FA.
I personally suggest using 2fa from Google which can be found on both Android and Apple store. You can use 2fa security layer on any other account that supports this feature, like Facebook, Github etc
Software Wallets
When it comes to software wallets the options available out there are numerous. I have not tried all the existing wallets out there, however i will cover some of them which have built a name for themselves and which i have used.
Jaxx is a multi-currency Ether, Ether Classic, Dash, DAO, Litecoin, REP, Zcash, Rootstock, Bitcoin wallet and user interface. Jaxx has been designed to deliver a smooth Bitcoin and Ethereum experience. It is available on a variety of platforms and devices (Windows, Linux, Chrome, Firefox, OSX, Android mobile & tablet, iOS mobile & tablet) and connects with websites through Firefox and Chrome extensions. Jaxx allows in wallet conversion between Bitcoin, Ether and DAO tokens via Shapeshift and the import of Ethereum paper wallets. With an array of features and the continual integration of new currencies, Jaxx is an excellent choice for those who require a multi-currency wallet.
Exodus is a relatively new and unknown digital wallet that is currently only available on the desktop. It enables the storage and trading of Bitcoin, Ether, Litecoins, Dogecoins and Dash through an incredibly easy to use, intuitive and beautiful interface. Exodus also offers a very simple guide to backup your wallet. One of the great things about Exodus is that it has a built-in shapeshift exchange that allows users to trade altcoins for bitcoins and vice versa without leaving the wallet.
Copay has been created by Bitpay and it proves to be one of the best digital wallets on the market. If you’re looking for convenience, Copay is easily accessed through a user-friendly interface on desktop, mobile or online. One of the best things about Copay is that it’s a multi-signature wallet so friends or business partners can share funds. Overall, Copay has something for everyone. It’s simple enough for entry-level users but has plenty of additional geeky features that will impress more experienced players as well.
Coinbase is an online web-based wallet and is the beginner-friendly version of GDAX. Users using Coinbase can easily transfer their funds to GDAX without any fees. In the same interface, you can make quick purchases with fiat. All in all it is a great starting tool which offers all the tools necessary to get into cryptocurrencies. The drawback of this service are expensive fees and their limited variety of coins available (Bitcoin, BitcoinCash, Ethereum, Litecoin).
Hardware wallets
Hardware wallets are slightly different from the software wallets as they store the user private keys to a hardware device like USB. Although hardware wallets make transactions online, they are stored offline which delivers increased security.
Depending on which one you choose to use, hardware wallets can also be compatible with software wallets thus allowing the users to access the wallets from a web interface and making transactions seemingly easy.
By simply plugging the hardware wallet in an internet-eneable computer or device and using the pin, users can make transfers more securely. Below is a list of the top 3 hard wallets that are on the market for long enough to be trustworthy.
Trezor is one of the first movers in the hardware wallet industry and sets the gold standard for crypto security. Trezor has a reputation for providing top-notch security, protecting against both virtual and physical theft. What Trezor lacks in style, it more than makes up in the security department. Even if your PC is compromised with malware, your private keys will still be safe with Trezor. In this sense, Trezor is more of a vault than a wallet.
Keepkey is produced by a relatively new company and offers a hardware wallet of a polished design. Keep key and Trezor are not much different, as a matter of fact, KeepKey is actually a port of Trezor's code and firmware. However, the design of the two devices differ. KeepKey feels like a ‘premium’ wallet but might be a little on the heavy side and hence more susceptible to drops. It comes with a standard, simple to use client UI.
Nano Ledger is my personal favourite as it can be used in conjunction with other software wallets such as Copay, as mentioned above or a wallet iterface such as MEW . Utilizing state-of-the-art Secure Element technology, the Nano is like a mini-computer that generates your crypto transactions offline, meaning hackers can NEVER compromise your hard-earned crypto. Another added perk of the Nano Ledger S is that it uses FIDO authentication software, allowing you to set up 2-factor authentication on your hardware wallet—yet another layer of defense. Being smaller than KeepKey, it is more portable and easier to carry around. It is a hardware wallet that comes at a very competitive price.
Paper wallets
Paper wallets are yet another form of storing your cryptocurrencies by printing your private keys down on paper. The main advantages of the paper wallet include: safety from malware and key loggers; not having to bank upon the security of any website; and protection of private keys by 100% ownership.
The flipside, however, is that the safety of the physical document can't be guaranteed either. All information required to spend the Bitcoins is there on a paper and thus should be kept very secure. If a paper wallet is lost, there will be no way to access the Bitcoins sent to that address.
Which one is the one i should pick?
There is no doubt the options are many out there. Blockchain and the whole crypto space is evolving as we speak and even more solutions will come that will help us keeping our earnings safe.
Remember that no matter which wallet you use, losing your private keys will lead you to lose your money. Similarly, if your wallet gets hacked, or you send money to a scammer, there is no way to reclaim lost currency or reverse the transaction. You must take precautions, be very careful and always:
- Backup your wallet.
- Update your software
- Add extra security layers
- Keep your private keys safe!
I hope you found this article helpful and please feel free to comment below how you keep your wallets secure?