Crypto Wallets
When it comes to securing crypto, you’ll need a wallet to do so. There are mainly four types of wallets: web wallets, software wallets, hardware wallets, and paper wallets. All of them have their pros and cons. Below is a video and underneath that is a brief description of them.
Web wallets
These are essentially account wallets that are created by the centralized service to track your account balance. Think of it as having an account number with a bank but instead with a crypto company. Examples would include your wallet with NDAX or Newton. These wallets are great because they’re easy and convenient to use. In addition, centralized services offer support when you need it as you can contact them directly with any issues.
One thing to really keep in mind is the lack of real ownership of your funds. What this means is that if the site goes down, so does access to your funds, both cash and coins. Just take a look at FTX, Celsius, and BlockFi as examples. So what are web wallets good for then? They're great if you’re actively trading and constantly using those funds in your account. However, I would caution you to keep only a small amount on there because you just never know what can happen with it. Only leave what you’re “willing to lose” on there.
Software wallets
Software wallets include mobile, desktop, and browser extension wallets. These are wallets where you have the private keys and real ownership of the coins. You can access these types of wallets on any device. You can sign off on transactions (send coins) right on the device you’re using on demand. Examples include Exodus, Trust, and Metamask. These wallets are great because they’re free, and you can create them within minutes. You have actual ownership of the keys and lastly, a lot of these software wallets support a number of coins so you can have your coins all in one spot.
One thing to note is that there could be a potential backdoor to your funds in the software’s code as the private keys are stored on the device itself. Or perhaps you download a program that turns out to be malware and it somehow gains access to your private keys that are on the phone. As software wallets are usually connected to the internet most of the time via your device (computer, phone) this makes them prone to hacks as outsiders may have ways to access your wallet or they may be able to find an exploit in the wallet's code. This is an example of a wallet hack. That's why software wallets are great for small amounts only.
Lastly, software wallets require more responsibility over your funds. You will need to really think about keeping your seed phrase in a secure spot. Pretty much, software wallets are good for those who want ownership of one's coins but don’t have large sums. For example, maybe you’ve got like $500 worth of coins that you want ownership of and that $500 isn’t a material amount to you. Essentially, with software wallets, you're trading off security for convenience. If you're new to crypto and are just learning how to create a generic wallet, this video shows how to create a multi coin crypto software wallet.
Hardware wallets
These are physical devices (image below) that are either not connected to the internet in any way or are online minimally. The purpose of them is to ensure that the private keys to the wallet never touch the internet. The private keys to the wallet are generated on the device itself to ensure maximum security. In fact, hardware wallets have a special chip inside them to ensure that the private keys (which give you access to the coins) don't leave the device. This means that you will require the device itself to sign off on transactions (send coins). As they are not connected to the internet for pretty much most of the time, they aren't prone to outside attacks or hacks via the internet and thus you don't need to worry about someone stealing your coins compared to that of a software wallet or web wallet; hacks and scams are more prevalent than you think, just check out the videos from this playlist.
One thing about hardware wallets is that, just like with software wallets, it requires more responsibility over your funds. You’ll need to be responsible over both the seed phrase and the device itself. This would be more so the seed phrase itself because even if you lose the device, you can still import the seed phrase into another device and you can regain access your funds. Another thing to keep in mind would be the inconvenience of needing to constantly sign off on the transactions if you do a lot of sending or DeFi stuff.
With all of that said though, I would strongly recommend getting a hardware wallet if you plan on accumulating a lot because they're the best compromise between security and convenience for 99% of people; you don’t want to be “penny wise, dollar foolish” as the saying goes.
If you are interested in getting a hardware wallet, I would recommend the SafePal S1. I currently use it as my hardware wallet and can easily recommend them to others.
5 key points on the SafePal S1:
1. Military-Grade Security:
The SafePal S1 employs advanced security features, including air-gapped technology and secure elements, providing military-grade protection for your digital assets. The SafePal S1 operates offline, minimizing the risk of hacking. You can manage your crypto assets conveniently through the SafePal app while keeping the private keys securely offline on the device.
2. User-Friendly Design:
With an intuitive and user-friendly interface, the SafePal S1 is designed for both beginners and experienced users. Its sleek and compact design ensures easy handling and portability. The SafePal S1's compact design allows you to carry it with you wherever you go. Its portability makes it an ideal choice for those who want secure access to their crypto assets on the move.
3. Wide Cryptocurrency Support:
The SafePal S1 supports a diverse range of cryptocurrencies, including popular ones like Bitcoin and Ethereum, as well as a variety of altcoins. It's a versatile solution for managing a diverse crypto portfolio.
4. Global Recognition, Trust, and Support:
The SafePal S1 has gained recognition and trust from users worldwide. It's a well-established and reputable hardware wallet brand known for its commitment to security and reliability.
The SafePal S1 has garnered positive reviews and testimonials from the crypto community, attesting to its effectiveness in safeguarding digital assets.
Lastly, rest easy knowing that SafePal provides round-the-clock customer support. If you have any questions or concerns, their dedicated support team is ready to assist you.
5. Easy Setup and Operation:
Setting up the SafePal S1 is a breeze, and its straightforward operation ensures a hassle-free experience. Whether you're a crypto novice or an experienced trader, the SafePal S1 caters to all levels of expertise.
Paper wallets
These are wallets generated online and can be printed off so that the private key stays on the piece of paper. This is kind of like the same thing as generating a wallet from a software wallet and writing down that seed phrase on to the sheet of paper. An example of a paper wallet is Bit Address.
Once the wallet, which is the seed phrase, has been printed off, it never touches the internet and is generally pretty secure. However, you will need to trust the website that is generating the private key or seed phrase.
You don’t know for sure that they aren’t peering into what has been generated. It very well could be that the generator has been hacked or compromised. Another thing to keep in mind is that you’ll need to really take care of the piece of paper that the seed phrase was written down on. You’ll want to make sure that the paper doesn’t rip or gets destroyed. If it does, you’ll no longer have access to the coins. One last thing to keep in mind is the inconvenience of sending coins. You would need to import that seed phrase into a wallet first to send off the coins. In that case, you risk the chance of your wallet being compromised each time you type your seed phrase into a device.
That said, I would say that these wallets are really only good for small amounts and if you’re wanting to gift some coins to someone and want it to be something physical. For myself, I actually got into crypto in early 2017 when a friend of mine had given me 1 ETH on a piece of paper as a gift. He generated the wallet using "My Ether Wallet" and printed it off and sent the 1 ETH to it.