How to Pick a Cryptocurrency Wallet: Simple Hacks to Choose the Right Tool

Interest in these wallets is growing in proportion to the excitement around digital money rates. As long as the demand for Bitcoin, Ethereum, and other popular cryptocurrencies remains high because tokens allow people to play live casino online games, buy expensive items and stay anonymous, attention to the choice of wallets won’t diminish. After all, a wallet is an essential tool for owning and handling digital money.

What Is a Cryptocurrency Wallet?

Much has been written about cryptocurrency wallets. Thematic articles are often enthusiastic, replete with incomprehensible, but solid-sounding terms. A fair share of such materials in their own way answers the question “what is the best wallet for cryptocurrencies?”. But there is no unequivocal answer, and no one can expect one, including the fact that such texts have an explicit (or implicit) advertising component.

Some general rules:

  • You can’t take money out of a cryptocurrency wallet. Digital cash is only arrays of information in a blockchain (i.e., a system of blocks of data). Cryptocurrencies cannot leave this system. The right to own a certain amount of virtual money and operations with it: payments, transfers, represent only new information chains in the overall structure.
  • Cryptocurrency wallets store data for login and authorization in the system. Something similar to a password, but more complex. As well as copies of blockchain state data. But here the amount of information can vary. The way a user logs into a cryptocurrency structure could be compared to a password-protected login to an email account or a Facebook account.

However, there are fundamental differences:

  • An email box or Facebook account is controlled not only by the person who knows the password, but also by the owner of the service.
  • Cryptocurrency systems have no such control.

The wallet, to put it simply, is the only password and key to the account. If it’s lost, the money is forever no one’s money in the network. There will be no one to turn to to regain access. An e-wallet for cryptocurrency is not just an array of data, but a computer program.

Selection Criteria for Choosing a Wallet

The main thing you need from an e-wallet is to keep your data safe. When choosing the right way to store your data, think about how often you will use the wallet, where you plan to pay: only on the Internet or pay for goods and services offline. In addition, several factors affect data security.

How You Control Transactions

  • Full. You are fully responsible for the safety of your funds.
  • Joint. For transactions, you need the confirmation of the third party.
  • Partial. Third-party service is responsible for security, but you have access to your funds.

Code Transparency

  • Basic. Doesn’t give a hundred percent security guarantee.
  • Full. Open source code, any developer can check security.
  • Remote application. Security depends on the service the data is downloaded from.

Checking

  • Simplified. Takes little time, may be insecure.
  • Full. Downloads the entire blockchain, takes a lot of time and requires a lot of free disk space, but should provide more security.
  • Centralized – Conducted with special services.

Security of the Environment

  • Vulnerable. Characteristics of desktop wallets.
  • Secure. More common for mobile apps, which store data in an isolated memory segment.

Level of Anonymity

Basic. Information about your transactions is sent to other nodes, you can’t use Tor for privacy.

Advanced. You can use Tor, your data won’t be sent to other nodes.

Nuances and possible Problems

With all the convenience and high level of security, users may encounter a number of problems:

  • The wallet doesn’t have reliable protection against theft.
  • Changing a password does not guarantee security because it’s possible to get access with an old password by means of a backup.
  • The IP address from which the transaction was made can be calculated.
  • Possibility of hacker attacks.
  • System errors.

Security Measures

Bitcoin wallet security should be taken care of no less than the security of a real wallet. It’s the user who is responsible for storing the keys to access the coins. There are several ways to secure funds in an electronic wallet.

Use a complex password that contains letters, numbers, and symbols that are 16 characters or longer. A strong password can be generated with special programs. Take care not to forget or lose your password. A long sequence of characters is difficult to remember, so keep it written down in a safe place.

Encrypt your wallet. You can encrypt your wallet or smartphone using special services. This will protect the funds in case someone else tries to withdraw them. This method won’t protect against the actions of intruders, who, using keyloggers, can track what characters you type on the keyboard.

Beware of online services. They’re not secure enough to keep all your coins there yet. If you do use them, choose carefully and use dual authorization.

Separate funds into several wallets. Leave some money in a convenient and accessible wallet, and put the rest in a more secure place. In this case, even if you fall victim to fraudsters, you will lose only a small amount.

Create a backup copy. You can’t rule out the possibility of an error in your system or your computer, so make a copy in advance to recover. Make copies regularly so you don’t lose any of your bitcoin addresses. The copy should also be encrypted.

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