How safe is a wallet for cryptocurrency
When it comes to cryptocurrency and using them for transactions, wallet comes in use. Yes, these virtual mini bank accounts with the hell of functionalities do work out like miracles and also provide a lot of features. Sometimes having a wallet already prevents you from paying extra prices since the wallet helps out the exchange platform automatically. And you can easily secure out your wallet with the help of different kinds of security features including a two-way authentication key that makes matters more simple and secure. But just how safe is it?
Just as bitcoins are highly safe for the transaction of money or assets or even ownership of the coins from one to other, these actually offer high-grade security to all those, who use bitcoins. The blockchain system responsible for everything that is done via bitcoins handles all these stuff. Now prior to that, the wallets that keep the bitcoins (if preferred or else other cryptocurrencies like Ethereum, Litecoins or Bitcoin cash) also have a good grade of security since there is no point of keeping cryptocurrencies in wallets which have no prior protection. Plus, blockchain system (for bitcoins) keep themselves always alerted of every transaction that occurs and keeps all the relevant data to itself (than just sending these to a bank agency or a central bank for verifying the details, as these can be a severe trap to a major data leak or even a trial of stealing the cryptocurrency units right away from the owner), which makes it more than just safe and secure. Also, when a transaction occurs, the system detects all the accounts that are responsible and related to a particular transaction and keeps everything noted down (on the blocks as block data) so that when a theft occurs, the investigation becomes much easier and simple. But including all this, is it still safe for a user to keep his units or cryptocurrencies in a wallet?
At first, it depends on the user who is using the wallet. Since he too will be liable for not taking enough security measures onto his wallet. Websites that lend out these wallets, do have a good amount of such features to ensure you of that unless you are careless, no such major attack can be done at all. So it is quite safe to keep cryptocurrencies in a wallet somehow.
But do we need wallets to keep the cryptocurrencies? Absolutely. If not kept in the wallets, where we will be able to keep it? Definitely not in pockets, since that can be made possible (by the use of paper wallets or hardware wallets which don’t need to be consistently connected to the system for accessing the wallet, as you can connect them online and use them whenever you want, and then plug them off for later use), but we do need a wallet for that too. A wallet is not just a pocket or a pouch to keep all the cryptocurrency units so that they remain safe in one place. There are a lot of things which can be done via wallet including keeping track of the money to where it goes and to whom it goes. These are just default applications of the wallet. But mainly, the units need to be kept in one place so that they can be used properly. Plus, when you create a wallet, you need to connect your bank account for depositing or investing the money to be able to buy the coins (or what is known as exchanging for the coins). And then revert back your coins to the original currency when needed within seconds, just by using the wallet. You still need a wallet for using the cryptocurrencies since that is the only option for you and this what is provided by the cryptocurrency service providers. You won’t be able to deny them and then use their units.
Well, the case is not always hard like you think. You can still exchange your USD money for the coins and then prompt the cryptocurrency handler to actually print coins for you. Yes, this is actually possible (but there are consequences too, which I will be explaining later as to why no one mostly even uses physical coins). The price for which you will be normally buying the coins is the actual market price when you buy for the wallet and you will keep this coins in the wallet. Else, if you want to buy physical coins then you might have to pay more than the original price, which is the extra price you have to pay for the making of the coins. The coins come with a digital sticker for the originality and you can use it for buying or selling. The coins when created come with a usual sign mark of being an official and real coin (since any physical coin can be duplicated easily and sold), and it also gets an identification from the blockchain system as when used to buy, it can be easily recognized. Physical coins of cryptocurrencies have a different signature than that of the virtual coins, but their application is similar. If you want to know about the safety, physical coins are highly secure from the hand of the creepers or the hackers as they can be accessed at all from online (creepers will not even try to steal it by hand from you). These remain with you and completely untraceable unless you use them for buying or selling anything online.
Now, why most of the people don’t use physical coins at all? The biggest flaw – they cannot be accessed or used instantly. This is actually a problem since cryptocurrencies (likely bitcoins) always have high difference rates of inflation and deflations which makes more and more volatile in terms of their values. Having physical coins on offline makes them accessible but not so fast with which you can make an immediate purchase or sale. Since within seconds rates go up and down, it is highly inconvenient to keep the units not connected to the wallet right away. You might miss the best offer for buying coins at the best price or even selling them for the best price that you can think of. So, security comes with the price, that’s for sure. Plus, you might be able to keep the coins for yourself but without using them, you won’t be able to do any profits.
So we do need a wallet for the best use of the coins else with physical coins the consequences can be seen with ease (and the owner might be the one who will get the loses). But what to do for its safety?
When safety is concerned and as mentioned above too, the safety measures taken by the website holders are of a quality grade for the maximum protection possible. Since they can’t open up a blockchain type security system with a large number of miners to let a creeper compete with them for getting hold of a wallet, getting the password is another easy point for them. But, blockchain systems do care for the protection of the bitcoins and they will do anything to keep the coins away from the wrong hands. Along with transactions that come along to be processed by the blockchain system, with every transaction that is done, the system keeps a track of every minute detail that is relevant to an individual transaction. It keeps note of almost everything and keeps it with itself for future reference and in case a data leak or a theft occurs, it can investigate with efficiency. That’s a by default protection offered by the bitcoin holders. The rest is up to the wallet holders.
The wallet holders when creating a wallet from a particular website gets several options for security. As it is the duty of the website to provide the best possible service, it literally gives everything is necessary for keeping your account safe. But what you can do to keep your wallet safe for the time being? A lot.
When you log in to your wallet, at that time the secured private key that you are entering into the system for proving that you are the owner of the wallet, the key gets verified, you get logged in and then you can do whatever you want. This is how the login works. Your private key can be easily duplicated and can be used for logging in to the system, which is highly possible. This can be easily done when you are logging into the wallet, at that time, the key can be copied from you (after you have entered it) and then misused. This is one of the most common and simplest ways in which your wallet can get compromised along with the all the money you had in it.
To prevent that, the wallets come with intense login techniques that makes login much more secure and handy. There are various techniques which are used in the wallets and many more are yet to come. One of the most used is the two-way authentication login system which makes the user log into his wallet using a one-time passkey sent to this phone when he tries to log in. This is done in order to make sure that the person who is logging in is the owner himself, as in a case of a creeper trying to get into another wallet with the right technique might be able to successfully get into. The owner when login in, provides the public key and the system sends a one-time passkey (or similar to that in meaning) to the owner’s phone which he receives and then he enters the code into the system. It verifies the code and then prompts the user to enter the private code. This techniques limits a creeper from using the wallet at all, since he won’t have the phone to receive the passkey, else no entrance to the wallet without that even. This is a much more convenient method for the user to log in as previous methods were not that better, which limited most of the users to even use the cryptocurrencies. Since, if the original user by mistake provides the private key in the wrong way, he will get locked out of the system and his wallet too. Further interference will too result in a bigger consequence since the system will take into account that the user is not the right one. The two-way authentication verification system makes sure that the user is actually the rightful owner of the wallet account and even if he gets the wrong passkey, there are other ways in which he could recover it.
Most wallet sites have various methods of verifying their wallet account holders. Recent updates for sites are yet to come, with one IP address specified login system, which will after verification of the one-time passcode, the login process will only be possible through a single IP address, thus making the login process only single way. Thus creepers and hackers won’t be able to login even if they have the actual private key since a verification of the IP address will be to a recommended thing to do.
So, with the original thought of how much safe a wallet is for cryptocurrencies, the answer is pretty much positive and yet to be made better with the coming generations. The present system and techniques of security are good enough, taking different arrangements and practices for verifying the user of the wallet during the logging in. This makes work for the original user much better, safe, simple and applicable, ruling out all the problems of creepers, who will be interfering with the process. And with that too, the cryptocurrency holders also provide a way better and best possible to make working with the units much safer. They make it an effort to note down every single detail that is relevant to a transaction and preserve the data for future use if any case a theft occurs or any loss of units occurs. That too in a very complicated process making it much tough for a change to occur in it too, thus marking the originality of the data.