Cryptocurrency web wallets can be an extremely convenient and cheap way to store funds. They offer flexibility and ease of access from anywhere with a reliable internet connection. Below are three examples of these types of wallets, with their inherent advantages and drawbacks.
Coinbase is a web-based digital wallet and exchange. Despite the recent cryptocurrency downturn, business is still booming. Users are able to buy, hold and sell major cryptocurrencies, including; BTC, BCH, ETH, ETC, ZRX and now BAT. The choice of this is, therefore, more limited than some other online wallets, however, this limitation is offset by the exchange and fiat deposit functionality.
Safety features include segregating customers funds from Coinbase’s operational funds. These funds are held in custodial bank accounts, which means they will never be used to operate the business. These include:
- Firewalls: Known as creating a ‘firewall’, this practice is common amongst major banks, and is a great indictment of the seriousness of which Coinbase is operated – it even protects users against an unlikely insolvency.
- Cold Storage: Moreover, 98% of customers’ cryptocurrency funds are stored in secure cold storage (offline). Cryptocurrencies can be withdrawn at any time.
As a result, Coinbase is an exceptionally safe place to hold your cryptocurrency funds and offers the distinct advantage of being able to exchange on-platform. The only major drawback being the lack of wider coin support.
Coinpayments is a web-based digital currency wallet, allowing more than 1050 cryptocurrencies to be stored in their online wallet. Free to use, with no charges for registration. Users pay a transaction fee for transferring their cryptocurrencies. Hundreds of online stores have integrated Coinpayments functionality into their checkout pages, making it incredibly easy to actually use your funds!
In accepting 1050 different cryptocurrencies, Coinpayments offers a multi-coin wallet. This enables the user to only create one account for all their different holdings.
Web-based wallets do have an increased attack vector surface, due to their online connectivity. To mitigate this, Coinpayments invokes several safety features, including:
- BitGo Integration: provides secure online wallet access for users to also access fast payment rails.
- Vault: A vault feature (storing your cryptocurrency in hardware wallets) is used to secure funds. This can hinder quick withdrawal functionality.
- Mobile App: Despite Coinpayments being a primarily web-based online wallet, it does also feature mobile app functionality. Whilst not necessarily a primary safety feature, it does mildly decrease online attack vectors via phishing and keylogging malware.
Coinpayments also offers excellent safety features, if not quite to the same fastidious attention to detail as Coinbase. Offering such vast support for over 1,000 cryptocurrencies is certainly an advantage and offers great convenience for the user.
My Ether Wallet (MEW)
An online wallet exclusively Ethereum and Ethereum-based tokens, My Ether Wallet (MEW) offers a simple and barebones storage solution. Users a required to create a password to encrypt their private key, and to note their private key down (much like a paper wallet). It is also possible to connect hardware wallets and other cryptocurrency wallets to MEW’s online interface.
Security for MEW is minimal, with a relatively high-risk of either keylogging or malware gaining access to your funds. They do not offer offline storage and do not accept any liability for miss-sent or lost funds.
Whilst MEW provides necessary lightweight access and storage for the Ethereum ecosystem, it can not be a recommended long-term solution to safely storing your cryptocurrency.
Three very different online wallets demonstrate the advantages and drawbacks of each service. Online wallets provide invaluable and cheap access to storing cryptocurrencies, offering a viable alternative to hardware wallets.