Pandayield 101 — Secure your crypto
When we talk about crypto, we definitely have to talk about safety and security. We are never secured enough or safe enough when it comes to crypto. We’ve all heard about someone who has been scammed or stolen all of his cryptos from the wallets. That kind of story has become old and daily news in the crypto sphere.
First thing first, wallet.
Essentially there are two categories of wallets.
Hot vs Cold
Hot wallet is directly and constantly connected to the internet; it is an online wallet. Basically, this wallet is used by those who regularly touch their cryptocurrencies. It is mainly used by those who trade, transact, withdraw, deposit, etc. However, lots of new crypto users are using hot wallets due to a lack of security information.
This type of wallet is meant to be super easy to use and very accessible. That also means it is less secured.
Meanwhile, a cold wallet is hard to access. The cold wallet is designed for those who don’t need to use their cryptos often. It’s only connected to the internet when there is a need. So to say, it’s supposed to be very safe. It is also advised to use the cold wallet for storing a large amount of crypto.
Hot wallet example
Full nodes, Binance, Metamask, Trustwallet, Electrum, Exodus, Blockchain.com, etc.
There are three main types of hot wallets.
Web wallet: it’s essentially a browser interface, meaning the user doesn’t have to download anything and can easily access the wallet. This type of wallet is risky as usually, a third party handles the private key. It is also essential to do your own research on the web wallet provider and choose a platform that offers more than a simple password to enter your wallet. Binance is a good choice as it offers double authenticators, anti-phishing code, and withdrawal address whitelist.
Desktop wallet: it is a wallet that the user has to download into his device and locally execute it. The device’s owner is in full control of his private key and funds. Anytime the user would want to use his wallet, he will need to enter the password. By entering a password, the user will access the wallet.dat document stored locally. It is a more secure wallet, but the device must be bug and virus-free.
Mobile wallet: this type of wallet works in almost the same way as a desktop wallet. Instead of having a desktop wallet, the user has a smartphone app. This type of wallet is easy to use, just like the web wallet. It allows the user to carry his cryptocurrency wallet everywhere with him. That also means it could be risky, especially if the mobile isn’t secured.
Cold wallet example
Hardware wallets and Paper wallets
Hardware wallet: it’s an actual physical material. It looks like a USB stick that generates a random suite of figures for the private and public keys creation. The keys are then stored in the material. In order to use this wallet comfortably, there is a learning curve, and the user needs to get used to it.
Paper wallet: it’s an actual piece of paper with QR codes printed on it. The QR codes are used to execute and confirm the transactions. However, this type of wallet isn’t secured anymore as there were lots of bad stories around the paper wallet.
Following this article, there will be the best practices article to secure your crypto.
Pandayield 101 is a series of educative articles produced by Pandayield.com to guide newcomers into DeFi and Yield Farming universe.
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