Owing to the excessive volatility of the cryptocurrency market, the popularity of various exchange platforms is insane. Trading on the exchange can be truly exciting and even profitable but, unfortunately, when it comes to the security aspect, the situation doesn’t seem so bright.
Crypto Wallet contains essential data that allows the user to access funds on the blockchain and, if properly managed, should ensure the safe storage of these assets.
The wallet contains a private key and a public key. A public key or address is a digital string that everyone can see, and which is used when sending funds to your wallet. It can be compared with the address used by the post office to deliver letters: everyone can know your address, send you messages and postcards, but still can not enter your house.
How to store cryptocurrency?
Special software usually required to work with cryptocurrencies – it’s a wallet program (or online resources, cryptocurrency exchanges). This program allows the user to work with the blockchain and create transactions or receive transfers to his address.
Wallets on which the currency is stored can be classified:
- Exchanges: keys are generated on the servers of the developer or third parties. Your private keys are also stored in their cloud, which is why these wallets are more prone to attacks or theft. Of course, you can access your account from any device using a browser and an Internet connection. Examples: Coinbase, BitFinex
- Wallets: keys are generated on the servers of the developer. Examples: Freewallet.
Software wallets. Software wallets can be mobile or computerized, which are downloaded directly to the device.
- Web wallets: Such wallets are most popular with novice users and people who trade a lot. Web wallets are usually offered on the sites of large cryptocurrency exchanges. They can store any currency that you bought, quickly sell it or transfer it to other users. The popularity of this type of wallet is due to the ability to quickly and simply sell different coins and make transfers directly on the site, which is very convenient for novice users. Web wallets are also good in that they can be accessed through a browser from anywhere in the world. This allows you to always manage your funds if you need to pay for something or make a transfer. The main problem of such wallets is the presence of potential risks of hacker attacks, therefore, storing large funds in them is dangerous. Despite the fact that the relevant sites are doing their best to ensure the security of the proposed wallets, they cannot control your computer and detect viruses and spyware on it, which hackers use to steal money from accounts.
- Desktop wallets: It’s a kind of an actual app that is installed on your computer.
- Mobile wallets are usually used to store small amounts intended to transfer coins to other users or pay for goods in online stores and physical retail outlets. More and more stores around the world are beginning to accept payments in Bitcoin or Ethereum, so it’s convenient to keep some of these coins in your mobile wallet in case you need to pay something. But Guarda is created to work with any amounts, due to its big variety of functions. For example, in Guarda wallet, a person essentially downloads a program to a device that generates keys. To check this, you can turn off the Internet and create a wallet – the keys are generated.
Paper wallets. A paper wallet is considered to be the safest mechanism for storing bitcoins. To use them user prints keys on paper and integrates them with the online wallet. However, even so, the Guarda developers have already come up with a solution for you. You can absolutely safely generate your private key, however, to send funds, you will need an Internet connection. Guarda developers have provided all kinds of cases and added the watch-only ability to safely monitor the balance.
Hardware wallets are physical, electronic devices, such as USB flash drives, that can generate secret keys and digital signatures of transactions offline. They can guarantee complete anonymity. They are much more expensive than other options, but they are easy to set up, back up, and use. They are also very safe, as they can work offline. Examples:
- Ledger Nano S (Compatible with Guarda Wallet)
- Trezor Model T
Guarda is the quintessence of all types of desktop wallets. Through the use of our application, you have the opportunity to functionally use all kinds of cryptocurrency solutions in one place, and in just a couple of clicks.
Custodial vs Non-Custodial wallet
A non-custodial wallet is a type of decentralized wallet in which a customer owns his private keys. The user receives a file with private keys and must write a mnemonic phrase with which he can recover his funds. Having private keys means that you have full control over the funds. Sounds good, doesn’t it? Yes, but keep in mind that full control of your money also means that you are fully responsible for your funds.
On the contrary, a custodial wallet is a type of digital wallet that stores personal keys of customers and provides backup and protection of their assets. Yes, you read it right. Keepers keep the private keys of users on their side. Control your money.
The benefit of a custody wallet
Loss of private keys or mnemonic phrase does not mean loss of funds, you can recover access to your wallet.
Many people are not very familiar with blockchain technology, and even crypto enthusiasts can forget the mnemonic phrase or lose private keys. You’ve probably heard the story of a guy who lost his hardware wallet with 7,500 bitcoins. With the storage service, you do not have to deal with it, even if you lose your phone or your laptop is damaged. Your funds may be refunded if you break your phone or forget your password.
It is easy to regain access to your wallet. You do not need to worry about the mnemonic phrase at all. Your account is already protected by the company and can be restored via your email, as in any other service.
Benefits of a custody free wallet:
- Mnemonic seed – usually a value of 12-24 words. This key, stored on user devices.
- An unprocessed private key is the actual private key in raw form (an alphanumeric string), which is also stored on the user’s device.
How to work with the wallets?
To use a cryptocurrency wallet, the user needs two to have the following keys:
- The public key is the address to which any can transfer funds;
- The private key is a secret alphanumeric code, with which the user signs his translations. The signed transaction is transmitted to the network and, after network confirmation, the funds are credited to the specified address.
How to choose a crypto wallet?
All wallets have their positive and negative attributes: strengths and weaknesses that must be understood to make an informed decision. Many users prefer the security provided by desktop wallets, along with the well-designed and aesthetically pleasing user interfaces offered by many of these wallets. Although they sacrifice something for protection, many users believe that online wallets serve their purpose and provide the freedom that other wallets cannot. In the end, it all comes down to personal preference, but, like all cryptographic things, it is essential to remember that the only person responsible for security is you: research, read, listen and learn.
In short, to choose the most suitable digital wallet for us, we must take into account our needs in comparison with each other based on specific fundamental criteria:
- Type of wallet we need. This factor is wholly based on our priority. For example, if security is a priority, let’s compare hardware wallets; However, if we want to get quick access to our digital tools, we can choose a mobile or web wallet.
- Easy to use. Sending, receiving, and storing cryptocurrencies can be complicated and confusing, especially for those of us who start in this ecosystem. Our wallet must adapt to our technical knowledge and our experience in cryptography. While newcomers to cryptography can focus on finding a wallet that is easy to set up and use, the most experienced can look for more advanced features and functions, such as exchanges within the same wallet and transactions with multiple signatures.
- Security. Let’s look at the security features of our wallet, such as two-factor authentication and multi-signature. Questions such as Will our private key be stored online or offline? Has this wallet been attacked and compromised?
- Support for other cryptocurrencies. Are we looking for a wallet that stores only one type of cryptocurrency, such as bitcoin, or do we need a multi-currency wallet? This is a helpful question when we are looking for a complete and advanced application for our future goals in the digital world. We need to make sure that our wallet is compatible with the cryptocurrencies that we want to manage, not forgetting that some digital currencies can only be stored in the official wallet.
- Updates and reviews. Let’s explore the company behind our wallet, how long has it been in business? What are your ratings and reviews for other users? It is important here to see if there is a corporate commitment to update and improve the application continually. This will show the level of community trust in this wallet.
- Costs. Although most crypto wallets are free, choosing a hardware wallet, for example, means investing some of our paper money, not forgetting the possible transaction costs.