Cryptocurrency Wallets: How To Choose the Best Hot Wallet for Your Coins

Crypto wallets are an essential part of buying, storing, and trading crypto. Since crypto tokens can’t be stored in physical wallets, banks, or other physical locations to store funds, users access their funds digitally via private keys. Each wallet is an interface that connects users to these keys in a safe and convenient way.

Many exchanges offer their own in-house wallets; wallets can also be obtained from third parties. With dozens of wallets on the market, crypto holders have room to choose according to their priorities for storage, securities, and currencies.

Here, we’ll outline types of crypto wallets, what to look for in one, and how to select the wallet that will give you the optimal trading experience.

Opting for hot storage

If you want to actively use your coins, you need a hot wallet. Essentially, a hot wallet is a software installed on a device connected to the Internet. This way, you can trade your coins or send them to other users. Although hot wallets provide an important function, they have security vulnerabilities. Because they are connected to the web, hot wallets are more susceptible to hacking and theft.

Like many investors, you can solve this problem by diversifying your storage methods. You can hold the majority of your crypto assets offline in a cold wallet and transfer funds to a hot wallet to make transactions as necessary, similar to transferring money between a savings and a checking account. This way, you avoid exposing your assets to unnecessary risk.

Security and trust

Because hot wallets are connected to the internet, they are more vulnerable to malware compared to offline hardware options. Even if you plan to use a hot wallet only for transactions, the level of security and encryption that a wallet offers should be the top priority when making a choice. Downloadable wallet apps are usually safer than those offered by web exchanges and provide access to your private keys.

Another important consideration is whether the wallet uses in-app advertising: third-party advertising networks can track your behavior across various apps or websites and profile you as the crypto investor. Coin Wallet is a strong option for users looking for an ad-free experience and provides robust protection against hacking via AES-256 encryption.

Take control over your private keys

One of the basic rules that every crypto investor should be aware of is that control of private keys equals the control of coin ownership. If you don’t directly control private keys, what happens to your coins is, ultimately, out of your control. Some wallets claim to keep your private keys in the most secure way possible, but no matter how you cut it, those assets are not truly yours as long as a third-party has the keys. For example, Coinbase stores the private keys of millions of signed-up users in centralized cold storage. Users may technically own those crypto assets, but have transferred control to a third party, similar to storing fiat currency in a bank. If the security of the third party is compromised or it is dishonest, those assets are gone.

Note that the custodial wallets provided by different exchanges and crypto services are often in a grey area when it comes to safety measures. One of the most devastating examples in the cryptocurrency market is the Mt. Gox hack. In 2014, this exchange lost 740 thousand Bitcoins due to improper cybersecurity measures that allowed hackers to access wallet keys. Because Mt. Gox users did not control their private keys, their assets simply vanished from their accounts.

Closing thoughts

When it comes to choosing a bitcoin wallet, take your time doing proper research and be an informed investor. Hot wallets are not optional if you want to do regular transactions with your cryptocurrency assets, i.e. trade, send, or receive new tokens, so you need to be confident that your assets will be protected.

Use the same principles for selecting a crypto wallet that you would for choosing a bank: it should have a track record of transparency and clearly implemented practices for upholding user security and control. Coin Wallet is one of the most secure hot storage solutions: this wallet has iron-tight encryption, no third-party advertising, and allows you full control over the private keys.


Posted

in

,

by

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *