By Stephen Rainbow
What is a Crypto Wallet?
To trade in cryptocurrency requires that you have a cryptocurrency wallet. Known as a crypto wallet, it is a software program that records transactions to the blockchain and allows you to securely send and receive digital currency.
Unlike a traditional wallet, the crypto wallet does not actually hold or store any currency. Crypto wallets are like online banking platforms. Wallets can be either private-key “full” wallets or “custodial” wallets.
Custodial wallets, like those used on third-party crypto exchanges, require only a password to access and manage your cryptocurrency balances. On the other hand, the private-key wallet has three components: the public address which is an encrypted version of the public key and functions like an account number; the public key which is a secure digital code connected to a currency balance; and a private-key that verifies the account owner. The private-key wallet allows you to monitor, send, receive, and store your cryptocurrencies without the use of a third party.
Regardless of the wallet type, the software program verifies the account holder and ensures transactions are securely recorded onto the blockchain, which is, essentially, a bank ledger. Depending on the wallet, they can either maintain multiple public and private key pairs (accounts and passwords), or they support only specific coins.
Following us so far? Good.
How Reliable is a Crypto Wallet?
The reliability and security of crypto wallets is directly related to the type (yes, there’s more) of crypto wallet you use and whether the wallet is actively connected to the internet. You need to understand the strengths and weaknesses of each type of wallet to fully optimise its use.
Crypto wallets can be software, hardware, or paper. If and when they are connected to the internet, the wallet is considered “hot.” It is recommended that you do not store all your cryptocurrency in a single “hot” wallet; instead, think of it as a traditional wallet and keep only the amount of currency needed for impending transactions. If the wallet is not connected to the internet, it is a “cold” wallet. Cold wallets are the safest and recommended for long-term storage.
Software wallets can be on a desktop, online, or on a mobile device. Desktop wallets are installed on a PC or laptop and can only be accessed from that particular computer. This makes desktop wallets one of the most secure forms of crypto wallets. However, if your computer is hacked or infected with a virus, there is a risk that you may lose all your cryptocurrency.
Online wallets are “hot” wallets, based in the cloud and are therefore easily accessed in any location from any device. This makes them very convenient but it also means — because they connected to the internet and controlled by a third party — that they are more vulnerable to theft and hacking.
Mobile wallets run on an app on your phone, making them convenient to use anywhere. The limited space on a mobile device usually makes this type of crypto wallet much smaller and easier to use than a desktop wallet.
Hardware wallets store a user’s data on a hardware device — including a USB. This is a “cold” wallet (while disconnected from the internet), meaning that the transactions are stored offline, making them relatively safe from attempts at theft and hacking.
A paper wallet is a paper copy or printout of your public and private keys as a QR code (two-dimensional bar code). A paper wallet also refers to software used to generate a pair of keys which are then printed. The “cold” paper wallet provides a high level of security because it is not connected to the internet.
Can a Crypto Wallet be Hacked?
Any online wallet can be vulnerable to hacking or theft. But there are steps you can take to reduce the risk. Again, the most secure wallets are those that are offline.
Even though online wallets have proven the most vulnerable and prone to hacking attacks, you should be diligent about security precautions with any kind of wallet. And if you lose your private keys, you will lose your cryptocurrency regardless of the wallet type. There is no way to reclaim your currency if your wallet is hacked, if you transfer funds to a scammer, if you lose your computer, or inadvertently wipe your hard drive.
Your wallet should be protected by keeping most of your funds in a secure environment and only maintaining small amounts of currency online. Updating the software on your wallet regularly and using complex passwords and additional pin codes are recommended steps for added security.
Just like traditional banks, wallet companies are competing for new customers. We recommend that you use peer-approved and wallets that are officially supported by the cryptocurrency. If you want a wallet with more flexibility, i.e., one that supports multiple cryptocurrencies, you should investigate the wallet’s security features and development team before deciding which is best for you. Make sure to consult Revain’s Platform for authentic, transparent, and immutable wallet reviews to help with your decision.
Revain’s Platform Is Adding More Crypto Wallets in 2019
At the end of December 2018, Revain had added 16 wallets to its Platform, and the reviews are already coming in. The goal is to feature as many as 130 wallets in 2019.
The Platform allows users to view basic wallet information, including the number of supported cryptocurrencies, the wallet type, and supported devices and operating systems. In this cryptocurrency community environment, you can view and rate crypto wallets according to criteria such as security, anonymity, and the ease of use. Revain’s customised algorithm ranks all wallets (companies) based on their popularity and user feedback. By contributing to the review community, you can help your favourite projects and other cryptocurrency holders by providing insightful reviews.
Using blockchain technology, the Revain Platform is specifically designed to bring trustworthiness back to online reviews. Building a community of crypto-enthusiasts, Revain provides authentic user reviews from those people who know them best — fellow crypto-wallets patrons. We hope you will participate as Revain extends our review platform to include crypto wallet coverage in what promises to be an exciting year ahead.