How to store cryptocurrency correctly in 2021. Wallet overview

How do cryptocurrency wallets work?

To work with cryptocurrencies, special software is usually required – this is a wallet program that is integrated either into the software, or into the exchange or hardware environment.

Is it safe to use cryptocurrency wallets?

In cryptocurrency systems, the security and integrity of your account is guaranteed by a network of agents (segmented file transfers or file transfers from multiple sources) that are verified by miners. They protect the network by maintaining a high speed of processing algorithms.

Hacking existing cryptocurrency security is mathematically possible, but the cost of achieving it is unacceptably high. For example, an attacker trying to cheat the BTC blockchain and double-spend would need computing power that exceeds the capacity of all miners in the system. But even then, he will not have all the control capabilities. A hacker needs to cross the 51% power threshold to even get close to this goal.

 

What choice is there

A non-custodial wallet is a type of decentralized wallet in which the client owns his private keys. The user receives a file with private keys and must write a mnemonic phrase with which he can restore access to his funds. Having private keys means that the user has full control over the funds. However, it should be borne in mind that full control over money also means that only the consumer is fully responsible for his funds.

In contrast, a custodian wallet is a type of digital wallet in which private keys and a backup of all data, that is, protection, funds, are on the developer’s side.

From the user’s point of view, of course, a non-custodial wallet is the most acceptable option, because in this case, attackers will not be able to steal assets, however, if you rely on the human factor and allow the likelihood of making mistakes, then storing funds in custodian wallets (not in in all cases), gives hope for the recovery of lost funds.

The wallets that hold the currency can be classified into:

Custodian wallet
Exchanges. For the most part, keys on exchanges are generated and remain on the developer’s servers without reaching users’ devices.

Software wallets. there are also certain software wallets like FreeWallet that store data on their servers. However, there are not many such services.

 

Non-custodial wallet

Software wallets. Software wallets can be mobile or computerized and downloaded directly to your device.

Web wallets. These wallets are most popular with novice users and people who trade a lot. Web wallets are commonly offered on the websites of major cryptocurrency exchanges. They can store any purchased currency, help sell it quickly or transfer it to other users. The popularity of this type of wallets is due to the ability to quickly and easily sell various coins and make transfers directly on the site, which is very convenient for novice users. Web wallets are also great because they can be accessed through a browser from anywhere in the world. This allows you to always manage funds if you need to pay for something or make a transfer. The main problem with such wallets is the presence of potential risks of hacker attacks, so storing large amounts of money in them is very dangerous. Despite,

Paper wallets. A paper wallet is considered the safest storage mechanism for cryptocurrencies. To use them, the user prints keys on paper and integrates them into an online wallet.

So where is the cryptocurrency to be stored?
Keeping crypto assets is the most important part of the job for any investor. So the choice of storage should be approached very responsibly. As the most popular options, there are three subcategories: software, stock, and hardware. Today, we will conduct a comprehensive comparison of the functionality, and figure out which of them will be most suitable for the specific tasks of each kind of user.

Review of software wallets
A software wallet is one of the most common storage methods, which implies multi-platform, quick access to your funds, and relative security. It should be understood that each software wallet is, in one way or another, tied to its physical medium, and its loss, in most cases, will lead to an irrecoverable loss of funds.

 

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