The debate over the best crypto wallet has to be understood in a wider context. The global financial crisis of 2009 prompted many experts to reshape the financial system. An anonymous group or person named Satoshi Nakamoto came up with the idea of a decentralized currency system operated digitally to secure the investment of people.
Since then, cryptocurrencies have gained considerable ground and any initial apprehension of investors has vanished altogether. However, with millions of people coming to the crypto fold, the security of these assets has gained center stage.
Malicious attempts to steal the private keys of investors are getting common these days as more people have started adopting these digital assets. Hackers are always seeking opportunities to take possession of the assets of gullible investors. The latter need to be made aware of the different aspects of cryptocurrencies and how to keep them safe.
In this post, we would know about the cryptocurrencies in vogue, the technology that enables crypto transactions, why these ‘currencies’ are being increasingly preferred, and how to keep them safe and secure. We would also assess the features of a crypto cold wallet that has emerged as the best alternative to protect investor wealth.
Popular Cryptos and NFTs
Following cryptocurrencies and NFTs are the most popular.
- Polka Dot
- Binance Coin
- Bored Ape Yacht Club
Blockchain technology: the method enabling cryptocurrencies
A blockchain is a digital ledger that records all transactions and facilitates a peer-to-peer transaction. It is a public ledger. The information is recorded in blocks that have a certain storage capacity.
After one block is filled, further information is stored in another block and a chain is formed in this fashion. Each block is encrypted and given a timestamp every time it is added to the chain. The ledger is immutable.
When a crypto transaction is initiated, it is transmitted to a network of computers. The computer network has to decrypt the code to validate the transaction. When the transactions are validated, they are clustered in blocks and when the chain of blocks is deciphered, the transaction is complete.
Why securing your crypto assets in a cold wallet is better
A Crypto cold wallet is a hardware device that is used to store your private keys. It is a compact device that can either be a compact disk(CD), USB, or a computer tablet-like device that is devoid of an internet connection.
Since the device is not connected to an internet network, the hackers cannot steal the investors’ keys because there is no way for them to gain access to the keys if they are not stored online.
If you compare a custodial wallet like a crypto exchange with a physical crypto wallet you would realize that even though the former has its servers and provides some kind of insurance to investors, these are still prone to cyberattacks.
According to an estimate, about $2 billion worth of cryptocurrencies were stolen in just the first half of 2022. Cyberattacks on crypto exchanges are on the rise with the addition of new investors.
Then there are hot wallets which are software that offer to store your private keys on their platforms but regardless of the upgraded security features of these hot wallets, they are not immune to phishing and bridge attacks.
Cold wallets are much safer compared to custodial and hot wallets because of the extensive security features embedded in these devices. The only catch is that the investors have to remember their alphanumeric key otherwise they could lose access to their assets.
However, some cold wallet devices offer services like having multiple accounts on the device in which you could diversify your digital assets and add a further layer of security.
Even after a decade since the launch of Bitcoin, the popularity of cryptocurrencies has not waned at all. It is getting recognized by governments as a legal tender like El Salvador has already done.
The revolution that cryptocurrencies and digital blockchain technology have brought to the international financial system has been noted by global financial organizations as well.
The decentralized mode of financial regulation has eliminated the need for any intermediary and people can now undertake peer-to-peer transactions with a digital currency. The element of financial privacy offered by the cryptocurrency network has made it a favoured choice for investors all over the world.
But, with the limited circulation of these cryptos, there has been a stiff competition to mine them and increased attempts by hackers to steal the investors’ assets. Therefore, investors should invest in reliable storage methods to keep their digital assets secure.
Although there are several ways to safeguard your tokens, a crypto cold wallet is by far the best because of the exhaustive security features embedded in them.