Storage options for a wallet (paper / APP / Hardware )
For keeping cryptocurrencies, wallets do help a lot. Although keeping the coins in an offline wallet would have been better (I you don’t even want to trade, which crushes your purpose of even using cryptocurrencies) but not that much applicable. Whereas a wallet comes out in handy, can accommodate a variety of coins and even lot of them. You can try keeping different coins in the same wallet if you like since if your wallet provider does support that, you can use this highly intuitive option which a number of users use. And with security, cryptocurrencies are always the best and top of it.
But specifically saying what is wallet? Some might know about it. And those who don’t know or did not understand it yet, here it is. A wallet is a special kind of money bag (making it as simple as possible) or simple virtual pouch, in which you can keep your digital currencies (or cryptocurrencies) safely along with added security (if you want and you will). A wallet is much more than a simple pouch for money and it is way more applicable than your physical money wallet. It can keep a whole lot of coins, practically in very large amounts (which your physical wallet cannot even think of keeping unless those large-sized notes get printed), it can keep track of the coins in your wallet, where they come from, which place which owner, and when you are sending the coins(or transferring them to a client), it can keep all the transaction records too(just the user and his public key along with some other details), make a list of such transactions to your service and lot more too. It can also tell you how much coins you have in total (in a value of course) and also remind of the price and rates fluctuations of the coins in the market, so you can better think of when to buy or invest in coins when to sell. Thus you can be better accompanied by the wallet, thus gain profits if acted in the right manner.
When it comes to keeping or storing the coins, you really don’t have to store everything in a wallet. Or do you? This answer depends as there are many kinds of storage options for a wallet, namely a hardware option, a software and an offline system that might keep you off the tracks of the creepers or the hackers who are always roaming outside the system for stealing others’ coins. Well, the system might not permit that, you should be always careful.
Now for the storage options as mentioned, let us explore one by one and see how much they are applicable in real life.
Simplest and most useful form of a wallet, software wallets are highly intuitive and used over a wide variety of people who use cryptocurrencies. These are developed by programming and can be used on any compatible devices. Software wallets comply into subtypes;
- Desktop wallets
They are the type of software wallets which are employed on your desktop computers and they function in them. The transactions that you do can be done in a good way through these wallets. They offer more advantages to a user, as complete control over the coins is available to him. This makes working with coins much better. Since the whole control is upon you, it also includes sending reports, maintenance of the wallet, keeping it updated. One of the most important things that you have to worry about, is the security that is to be employed. You have to take care of the security options, as the whole control is over you on your desktop. If some attack happens like a data leak or a theft, you will be responsible, not the wallet provider. For this flaw, many don’t prefer using a desktop wallet at all, since no high-grade security feature is available (from the user) to protect it.
(storing on desktops can be done via a highly offline method, that is by using computers that have any system to access to the internet, the transactions are done via the application form, after its done, you have to reupdate your wallet to ensure the coins in it either get incremented or decremented. This system is known as cold storage. Sounds shivering!)
- Online wallet
These are the type of wallets that are being placed in an online storage rather than in some place which you know better. Online wallets are like online media accounts, you can access them from anywhere in the world, with a service compatible device (like your phone) to access the wallet and transactions. Although this might seem a very good option for all kinds of users since you can use the wallet whenever you want, the privacy concerning is not much that good. What if you were to keep the passkeys of your account to another person? Well, the case here is pretty much the same. The owners of the wallet will keep your pass keys (in case you don’t ever lose them or even enter the wrong one which might emit you from the system completely, making you lose all your money and coins. You don’t want that really). This might be unsettling for some wallet owners since its never a safe thing where you will be keeping the password to another, considering the case here is of money. No one is truly trustworthy in the matters of money.
- Mobile wallets
Now, mobile wallets are something which provides you with both the features of the desktop wallets and online wallets in the same exact way. YES. To be simple enough, mobile wallets stay on your phone, you can use your wallet through it, all the login process is done on it. Some wallet providers provide an extra grade of security to the mobile wallets, as it is much easy for the system to verify the owner. The two way/factor authentication process works right away with this. The login process sends a passcode to your registered mobile number which you are allowed to enter to the system for completion of the login process (Waiting for the wallet providers when they will put in the one way IP address login along with the two-factor authentication). Although, mobile wallets provide you both the features of an on-storage wallet, where you get similar features that of the desktop wallet(along with handling the security features all by yourself). Another is the online system, where with the help of your mobile, you can access the online wallet from anywhere in the world (yes the password is still staying the wallet providers).
There are lots of software wallets like Electrum, Copay, Exodus, Jaxx which provide better facilities when it comes to storing bitcoins in them and then accessing them from anywhere.
Paper wallets are one of the most and best and way better options for securing your entire wallet and coin money from the hands of the creepers completely and with no such difficult effort. Paper wallet works on the basis of using codes to get to the system using a variety of process since the whole cryptocurrency system is an online thing and you can’t do anything if you are offline. You have to use a device to connect to the system and then request the system for whatever you want to do (there are separate options for separate tasks). And to be much clear, paper wallets are actually cold storage (in the other way form of being a type of hardware wallet that is more secure than a hardware device which still has the probability of being hacked or tracked down). Paper wallets have huge advantages, but require some working experience (of how codes are used for work) as they don’t work within the click of fingers. Although the risk of losing your paper wallet is as easy as drinking water. You will lose it way easier. If you don’t have a backup of the details (or of the whole wallet) then you will lose the account too and there is no restoration method for accounts in cryptocurrency wallets (until I have not heard of that).
Paper wallets require a functional device to work with the codes, you have to send them to the system, wait for the response to proceed further. When you have a paper wallet, the processes for transactions, buying, selling and investing in coins is the bit of a different process than the hardware wallets and software wallets. Since, the system has to work with a set of codes that it will be receiving from you in a possible hidden way, in which all the details will be prevalent. You can use a bitcoin paper wallet for generating your wallet and getting all the benefits from it. The paper wallet consists of the same public and the private key along with a QR code which will be used for the verification of your account along with the private key. You are not opted to lose any of these details.
You might be taken aback by surprise since paper wallets can also be hacked down by a creeper and the coins can be stolen. These are not completely hack proof. When you are going to be accessing your wallet through an online device, the password when sent through your phone can be traced down and then easily used in your absence. Getting the QR code from you without you not knowing is not that of a problem. Creepers or hackers do try to go this way and retrieve all the account details. Then your account is gone (not for good) along with all the money.
(It will be better when the one way IP address passcode system will come to use, the creeper might have the password but he won’t be able to use it from his IP address, which the owner of the wallet is only allowed to use)
Hardware wallets are one of a kind of wallets that have extreme level security as they are highly un-accessible to the creepers or the hackers. This makes them much more reliable and secures when it comes to handling and using bitcoins for all sorts of transactions, buying, selling and even investing in them.
Though hardware wallets are offered such reliability (through less connection to the system means more security as the probability of your wallet being hacked or crept becomes less, since you will connect to the system via your account not so often). Since, for all sorts of works you don’t need to be constantly connected to the system, when you need to work, connect, do your work and then plug off the hardware. This makes functioning simpler and smooth for users. One of the most discussed things among hardware wallet users is for the security system. Yes, these are highly secure but are they completely secure? Nope. Not at all. There are two different flaws when it comes to security for hardware wallets.
One is that when you connect to the system using your Hardware device, you are online too, in and out of the system. This means your device gets connected once when you use it, and if it is connected, it can be easily taken down by the hackers. That might for the first time you logged in, but there is a possibility that it can happen (and sometimes it does, people fall in this non-trap trap). You might be off with the paper wallets if this seems unsettling to you.
Another flaw is, when you use a hardware wallet, the whole responsibility of handling the wallet falls on your shoulders. Yes, the transactions and the account updation will be handled by the wallet provider and the cryptocurrency system along with its coin protection (which blockchain offers at a top level, but thefts do happen). And of all this, the main security protection responsibility of your own wallet falls on you too. Strange. Since a hardware wallet will be with you all the time (if you keep it with yourself), it cant be protected by a particular website who will take responsibility of your offline wallet, which you won’t be using most of the time. Now protecting an offline wallet might be hard, but big companies who use this type of wallet for keeping coins, they have professionals who sort out the security problem and place high-grade anti-theft arrangements and highly specified input guards which won’t even let a hacker get into it unless specified by the owner of the wallet. Big companies and firms can surely do this (and they do it) but simple users won’t be able to do such things on his own unless he knows about how to keep such security among his wallet. So, what is the point here? You will be left open around the field of hackers and creepers for being looted easily once they know that you are online. If bitcoins are concerned, then surely the blockchain system will take care of that but it won’t be able to return you your money which you have lost in the theft. That’s another thing which might be not your thing.
Hardware wallets do work with a chip like a device (like flash drives or even CDs if you are that old aged). Using hardware wallets is safer on the verge that you don’t have to log in to your wallet, it is your wallet only which is open to you all the time (once you have logged in). You might have to put a pin number to verify the usage of the wallet on a computer is done by you and it is secure enough. Although a hardware wallet offers you the ability to regain back your access to your wallet, in case you lose it by means of theft or creeping. They do come with their own software for the interaction of the device with the system. Hardware wallets cant provide you regular updates regarding price drop rates of the coins, so you might be not that updated to the recent things that happen in the market. Ledger and Trezor are the two most used hardware wallets used all over the world.
So, now you know about the storage options for different kinds of wallets which are used mostly by everyone with cryptocurrencies. Software wallets are widely used as these are much more reliable with security being provided by the wallet provider to you, so you won’t have to worry about being robbed. But they do come with some features not being completely controllable by you, as wallet provider websites have to take care of their wallets, in their own way so you won’t end up in a problem at all. But that leaves some users in tension, as important data can be mishandled by them(you do have software wallets that are the online versions of hardware ones). This is where the hardware and paper wallets come to use, where the complete control is on you. This suits much of the big firms and companies as they can take care of the security by themselves with top-notch technology being used. Overall all types of wallets, provide the best features possible in their own way to those who are fond of digital currencies.