When investors own cryptocurrencies, they face various risks and uncertainties emanating from hackers and scammers. The risks involved while investing in Bitcoin keep most of the traders on their toes. New scams continue to surface, and old ones resurge. Investors need to remain vigilant from various threats that may include a forged wallet setup, phishing attempt, or bogus cryptocurrency schemes. Despite several robust measures like anonymity, decentralization, cryptocurrencies still remain susceptible to scams. These risks led to the creation of various wallets that can be described below as:
Good Wallets:
A good wallet can be defined as a software program wherein Bitcoins can be stored in a hassle-free manner. Bitcoin wallets allow the sending and receiving of Bitcoins apart from offering possession of Bitcoin balance to a trader. An ideal Bitcoin wallet comes in various forms:
- Desktop wallet:
These wallets are not linked to the Internet and they are popularly known as cold storage methods. A desktop wallet provides users various benefits in comparison with an online wallet. One can access online wallets from all across the globe and they have emerged quite susceptible to hacking. While you can only access desktop wallets only through your personal computer with the help of personal securities keys stored on that device. Desktop wallets have significantly brought down the possibilities of exposing your crucial security key online.
- Hardware wallet:
This wallet has become safer than the desktop wallet. They can be defined as kinds of hardware, external equipment such as USB sticks. The USB sticks are travel-friendly, and you can carry them anywhere you go. A hardware wallet is quite effective in protecting your cryptocurrency, as you are allowed to store anything of substantial value in a hardware wallet. It stores your private keys and currency without having to connect to the Internet. According to experts, one should refrain from storing vast amounts of coins in digital wallets or your personal computer.
- Multi-signature wallets:
This concept has become famous, and it requires consent from at least 3 to 5 people to carry out a transaction. Therefore, it has become quite successful in containing theft bids, as one controller or server alone cannot make transactions. The individuals to be allowed for carrying out transactions are decided at the start.
- Hot wallets:
It can be defined as a tool that permits cryptocurrency users to store, send, or receive tokens. Hot wallets are connected with private and public keys that can enable transactions to take place. At the same time, they also function as a security measure. However, you may face a flaw while using these wallets. As they are linked to the Internet, they also remain fragile to hacks and theft.
Bad wallets:
Various types of bad wallets can be defined as:
- Custodial wallet:
It is a wallet wherein your private keys will be stored by a third party and you don’t get complete control over your funds. And, this is the reason why they have become a dubious option. You can swiftly manage your funds at any time when you get internet connectivity. In a custodial wallet, your crypto coins are likely to be seized by the court decision.
- Web wallets:
These wallets are controlled and managed by third parties. They hold the private keys and the public keys of a trader. Precisely, the method of accessing Bitcoin is substantially reduced. These wallets will include plugins, website wallets, and other types of hot wallets. You can access your crypto through the Internet. They may pose risks of hacking. And, a third party is storing your BTC instead of you.
- Cloud storage:
These wallets enhance the ease of accessing your Bitcoin from any device, provided you have got the correct passwords. They are quite convenient to set up. They come with desktop and mobile apps that make it easier to send or receive Bitcoin. And most of them are free of cost. They may also be controlled by third parties, and you may become prone to hacks or attacks.
- Paper wallet:
It can be defined as the printed piece of paper that will include your keys and QR codes. These wallets enable cryptocurrency transactions. As they are not connected with the Internet, they have been considered as a safer form of storing cryptocurrency. The paper wallet makes optimum utilization of public and private keys.
You must follow some additional strategies to keep your Bitcoin wallet safe. Given below are some methods that you may follow for the utmost safety of your Bitcoin wallet:
Software update:
Do not forget to update your software wallet consistently as it will help in keeping you safe from the latest malware attack. Windows users may be exposed to various kinds of malware. Your PC should have the latest and most trustworthy anti-virus software installed.
Back up:
A backup has gained significance as it will permit you to access your wallet if you happen to lose your device. You must select a safe location for a backup. If your device gets stolen, you can still restore access to your wallet with the help of a backup file.
Conclusion:
You hold the sole responsibility for the security of your Bitcoin wallet. The cryptocurrency scene continues to evolve and the security system has been improved. Therefore, take all required safety measures to stay updated. It will keep your BTC or another cryptocurrency wallet safe from the prying eyes of scammers and hackers. Same as that if you want to trade or invest in Bitcoin then choose Bitcoin Loophole which is the one of the secure platforms. To know more about Bitcoin wallets, go through our latest Bitcoin news section.