Best Cryptocurrency Wallets: Comparison Crypto Software Wallet (Web, Desktop, Mobile) vs Hardware Wallet
Assuming that you have invested some money in Cryptocurrency, would you leave it in the exchange you bought it from? That’s not recommended! If an exchange is hacked, then what happens to your money?
Cryptocurrency exchanges and servers hold vast amounts of currencies and hence are prime targets of hackers. You might have read a lot of articles of exchanges being hacked, with the hacking of the Mt Gox exchange in 2013 being one of the most prominent examples. In that hacking event more than 850,000 Bitcoin were stolen, valued at more than $450 million at that time and over $3 billion at September 2017 rates. I am sure you would not like to put your hard-earned money at risk.
Therefore, the safest option is to store your cryptocurrency in a wallet. So how does the Crypto wallet work and should I choose a Software Wallet or a Hardware Wallet? Would you go with a software wallet either on web , desktop, mobile version or go with a hardware wallet instead? This is even more confusing than it sounds as the level of functions and security in all the versions are different. As I wrote in my previous blog about Blockchain powered Cryptocurrency Wallets, it is similar to a normal bank account or nowadays like your mobile wallet, making it possible to send and receive the digital currencies like Bitcoin with complete security.
Now you might be thinking that your Crypto transactions are stored in these wallets but that is not true. The transactions are stored in Blockchain network in the form of secure digital codes, known as private keys (similar to your online banking PIN) that, when used, demonstrates ownership of a public digital code, known as a public key, which works as your wallet address. Your currency wallet is therefore a means of storing your access to your currency. Once your private key matches the public key, the transaction is successful.
There are wallets available in market which can store multiple digital currencies. So if you are intending to store several currencies, you may need to either use a number of wallets or select a wallet that is capable of storing all of your currencies.
Web Wallets are online wallets that store your keys online which is even easy to access from anywhere and from any computer. Hence, the web-based wallets are not that much secure as the public keys are stored on someone else’s server. Those servers are protected well but the system is not under your control. But if your wallet service provider allows you to purchase Cryptocurrency through their exchange, then using their web-based wallet is more convenient.
Desktop Wallets are software programs that store your digital currenciesin your PC or laptop. One of the key advantages of using desktop wallet is that it offers complete control of the currency to the user not relying on any third-party interface. However, on the other hand, it means that the entire security is your responsibility. If your computer gets hacked or compromised or if the computer hard drive breaks down, you may lose your coins forever. Because of such fear, people use unused or spare computers that never have access to the internet to store their Cryptocurrency, which is also known as ‘cold’ storage.
Mobile Wallet is the most effective option allowing you to use your Cryptocurrencies anytime anywhere. With Mobile wallet apps, you can use your device camera to scan the recipient’s wallet address / QR code which is even easier than typing in a long string of letters or characters when using desktop wallet or web wallet. Mobile wallets are also lightweight which compensates a reduction in necessary space and blockchain integrity, but mainly for daily applications, they work very well. The main advantage is that the keys are stored in your device and hence not accessible on internet or 3rd party server.
In spite of the fact that your phone can be stolen or lost, and alsoyour keys along with it, you could lose your cryptocurrency coins unless you have been smart enough to keep it as a secure backup in a hardware wallet which is described in the next section.
Hardware wallet is a dedicated device which provides an additional layer of security compared to software wallet. It is found that it protects your cryptocurrency from any malwares and hackers and also at the same time you can carrythe device anywhere you want without any hassle.
Hardware wallets have a secure chip (or equivalent) which means when you connect them to a computer, you do not need to enter your private key on the computer. You simply enter a PIN on the piece of hardware, meaning that trading on a compromised computer is safer. If the hardware breaks or is lost, then you can restore your access to your currency on a new device from the ‘seed words’ you receive with your hardware wallet. Also, if an unauthorized user tries to enter wrong PIN three times, your hardware wallet will automatically shut down. In case if the wallets shut down due to what so ever reason then the recovery can be done by using the restoration detail which comes with each wallet.
Although hardware wallets like, Ledger Nano or Trezor amongst the most popular ones, are the most secure options of storing your digital currency, you might want to think about the price they come for depending upon the currency you hold and transactions you do. To use hardware wallets, you will first need a software wallet to interact with the hardware device which usually are packaged with the device.
Although no option is truly 100% secure for storage of your cryptocurrency, there are a range of wallet product becoming available for the users for storing currency depending on their requirements. If security is your main concern, then choose a hardware wallet. If convenience and usability is most important for you, choose an online or mobile wallet.
Regardless of the wallet option you use, it is a good practice to backupyour wallet. Always keep backups of your details in a safe place, maybe on a piece of paper or in a stand-alone computer. And if your wallet has ‘seed’ words, make sure you never lose them.
Techcronus has built a domain expertise in Blockchain Development and Cryptocurrency Wallet Applications Development areas. Get in touch with us to get a free consultation about your Crypto wallet app development needs today with an assurance of getting a new and secure wallet!