Here’s a number of things that blockchain, crypto and all digital assets have in common: they are exciting, contagious and not surprising, overwhelming. Getting a hang of different aspects of blockchain—more so for novice investors or traders, may take months. In this emerging field, innovation, update, misinformation and the so-called FOMO flows at dizzying speeds.
But, encouragingly, at the end of the day, it is you the owner of the asset who has control. Unlike banks, the asset owner is tasked with safeguarding the coin and for this precise reason, different start-ups are racing, desirous of staying ahead of the curve as they churn out differentiated products that puts the needs of the client first.
Types of Wallets
After all, the adage is simple yet timeless, simplicity is the ultimate sophistication. Simple and well known but not all wallet providers subscribe to this. Wallets, as mentioned in our previous posts, are e-storage devices, a piece of software that securely store your private keys. Private keys are used for confirming ownership and since most cryptocurrencies are designed to be money, they are handy when approving transactions.
So, before we dive in, let’s just in summary have a look at the different types of wallets common in this burgeoning space:
Cold Paper Wallets: By far, this is the safest option of storing your automatically generated public address and public key. As the name states, paper wallets are a digital copy of the above information and often, they are accompanied by a QR code specific to the public address of the wallet it represents. Users can copy and enter the private keys—or scan the QR code– should they want to send or receive funds.
Cold Hardware Wallets: Here, private keys are stored on a USB device. They are usually used for storing large quantities of coins and depending on the manufacturer of the device, the wallet can support a single coin—usually Bitcoin, or multiple coins while remaining compatible with web interfaces. Hardware wallets bring in a level of flexibility because depending on the needs of a client, coins can be spent directly from the wallet once plugged into a laptop or computer. All this is done without the possibility of private keys being corrupted.
Desktop, Mobile and Online Wallets: All these wallets are “hot” meaning they have to be connected to the internet for operation. Online wallets run from the cloud, can be accessed from multiple devices and as convenient as they are, they demand an extra layer of security. Meanwhile, mobile and desktop wallets must be downloaded. Mobile wallets are convenient while Desktop wallets offer more functionalities but are equally susceptible especially if the computer or laptop is infected.
Factors to Consider When Shifting Between Crypto Wallets
These are the main types of private keys storage devices. Depending on the creator, the underlying code may or may not be open source. Other wallets support direct fiat–crypto purchases as they are linked to the user accounts while others are not. All these depend on the client’s needs and as mentioned before, the user has the autonomy of making a choice meshing perfectly with their respective wants. It is these needs that reflects the very nature of cryptocurrencies and blockchain as a technology: Freedom. But, when everything is said and done, what will make the user chose a cold wallet over a hot one? Why settle for an open source wallet over a private but hacker proof, time tested wallet? Here are some influencing factors that make crypto as a whole, open and free:
Flexibility: Are you a holder or a spender? How many coins are supported?
It is a simple question and a determiner on why you must choose a wallet say Bitcoin Ox over a cold wallet like Ledger Nano S for example. To begin with, there are different reasons why people are involved with cryptocurrencies. On one end, they are those that are in for the technology—the true believers. Yet others (the majority) are merely speculating on asset prices hoping for a bull run that will increase the value of their portfolio. Because of control and security, hot wallets are suitable for spenders. That is for individuals who would want to pay for bills off their mobile wallets.
On the other end, there are holders who often are early adopters. These individuals may have large quantities of Bitcoin or any other high-value wallet and decide to safekeep them in their paper or hardware wallet off grid and away from thieving hackers. Besides security, an ideal wallet should support a wide range of cryptocurrencies reflective of the speed of innovation in the crypto sphere. While you may settle for a hardware wallet to stash you prized assets like Bitcoin, for example, you may decide to key other coins in a multi-coin and a community endorsed hot wallet.
Security, Cost, Support, and Ease of Use
Emphasis has been laid on private keys’ security. We shall continue to reassert that and as long as there are different vendors, you should always select a secure, time-tested and community approved hot or cold wallet. Security aside, wallet flexibility is also determined by associated costs. If you need extra security then you will have to spend extra because proven hardware wallets come at a cost. Meanwhile, hot wallets are free to use and download. Most of these hot wallet start-ups have vibrant communities and a team of developers continuously improving the wallet features. The more communal the product is, the easier it is to use and nitpick for weakness thereby improving on its security. Once factored in, be free to assess the quality of their support. Hot wallet providers, especially in exchange, are notorious for poor customer care support especially when assets are rallying. Comparing different wallets and rating their support quality gives you a better picture of what you are immersing yourself in.
At the end of the day, what you settle for should give you a good night’s sleep. The choice of your wallet must be done with all considerations and must be meticulous. Hard wallets are recommended but they come at a price. Hot wallets are free but they are susceptible. All the same, even if you begin with a hot wallet, there should be a leeway. An option to transfer funds to a cold wallet in days ahead. Flexibility in crypto is paramount and it is for this reason why assuming you settle for a hot wallet, Bitcoin Ox is a representative of security, style, and functionality all fused up in an easy to use interface. It is a reliable multi-coin wallet with solid plans of connecting with your bank allowing direct fiat—crypto purchases. Add that to complete control it offers for your private keys it is easy to see why the wallet is ahead of the competition.