There is a thing or two about cryptocurrency and blockchain in general. On one had it is super attractive to have control but on the other, the burden of securing this control can be exhausting. Remember, cryptocurrency is built on top of the internet and is therefore digital. But we are not fretting. This is the liberating route most chose and as such we should scrutinize each and every aspect of a cryptocurrency wallet—especially a hot, web wallet.
By reading this, I assume you know a thing or two about cryptocurrencies and wallets in particular. If not, we have a nice piece elaborating the different types of wallets. It’s a general introduction. We are going to extend on that and go a level deeper, explaining in detail why some wallets–though popular lag, while new entrants, learning from the mistakes of pioneering platforms, promise to be shaping.
The question that we should be asking ourselves now that we are planning to either buy some new Bitcoins or any other coin of your chose or spend your stash is: What should I check before settling on a hot wallet?
Thing is, hot wallets are a honey pot for hackers considering that they exist in the web and man-made—meaning there are some flaws regardless of sweet marketing. Technically speaking and on a different level of scrutiny, hot wallets are in a way fallible. Vulnerability degrees vary and there are some that are sieves and others are a digital wall of steel.
It is these dependable hot wallets that possess these properties:
Multi-Currency Feature Support
By this, I mean the wallet should at the end of the day support a variety of currency. Bitcoin may be the most popular and valuable coin out there but there are other promising digital assets that offer solutions to different real-life problems. An attractive wallet should support at least three coins. Coins are crypto assets running from their own blockchains. Examples include Bitcoin Cash, Litecoin and Ethereum.
Besides, with the growth of the token economy, there should be an allowance for ERC-20 token support and even support of hard forked coins. Aside from crypto support, incorporation of fiat rails will be a huge boost and it is only a few wallets that support or plan to support this feature.
Although the community is striving hard to build an ecosystem around crypto where fiat or paper money is relegated to the background, crypto cannot exist in isolation as long as different government exists and the world remains as fragmented as it is. Securely integrating credit and debit cards within a crypto wallet will boost adoption as users can at any time convert their fiat to crypto and vice versa whenever needed.
Open Source and Free
It is not rocket science to see that free and open source project are often superior and sturdy than their centralized counterparts. Unless otherwise, you find a reason to subscribe to a premium hot wallet, a typical and trusted web wallet should be free and developed by coders from all over the world. Most importantly, the underlying source code should be open source and free for scrutiny or improvement.
After all, blockchain and crypto are built on the premise of decentralization and open source where the strength is sourced from the swarm. Good thing is, most wallets are free but not all are open source. We highly recommend taking your time and settling for a web wallet that is open to the public. Often times, they are robust and cases of vulnerabilities are rare, if not unheard.
Security and Control of Private Keys
Not your keys, not your coins. A crypto web wallet is defined by your private keys. Lose these and your coins are gone forever. That’s how delicate space is. And just for perspective, it is estimated that of the 21 million BTCs in circulation, four million are lost. At spot rates of $4,000, that’s a whopping $16 million of value lost. We are not even accounting for stolen coins. Therefore, it is imperative that you have control of your private keys. Proof of keys, proof of ownership otherwise failure to do so defeats the very purpose of crypto.
A perfect web wallet should support Bitcoin Improvement Proposal (BIP) 39 for Mnemonic code. Support as this means the coin is Heuristic Deterministic (HD) and assuming you swap phones or computers for example—you can recover your coins using a recovery phrase which you are required to back up in any HD wallet.
Another overlooked property of a good wallet is the ability to create as many coin wallets as possible without the need for using different passphrases. To further bolster your coins’ security, a multi-sig feature is quite indispensable. It is needed especially when coins are owned by different parties and different keys are needed to authorize a transaction.
Easy of use and Support
Apart from network specific properties as a fee, a wallet shouldn’t deter use. At any time, you should log in and spend your coins if need be. That is why a suitable wallet ought to have QR Code support eliminating possible error when sending or receiving funds.
It would be perfect if crypto—fiat conversion rates are displayed automatically as this will save time especially if you need to make quick payments or send funds. Lastly, assuming there is a glitch and you can’t access your coins, a good wallet always creates an avenue for communication. These channels should be open 24/7 and handled by a professional team.
To cap this up, cryptocurrency and cryptocurrency wallets are bits of computer programs. The software is prone to error and it up to you to select the best wallet for your holdings’ private keys. While other wallets are scams, Bitcoin OX Wallet is proving to be a real competitor thanks to their irresistible features.