Types of Crypto Wallets
There are two main types of crypto wallets: hot wallets and cold wallets. Hot wallets are connected to the internet and are more vulnerable to hacking and theft. Cold wallets, on the other hand, are offline and provide a higher level of security. The details are outside of the scope of this post, but some common types of crypto wallets include:
- Desktop wallets
- Mobile wallets
- Hardware wallets
- Paper wallets
Typically, hot wallets are used for frequent transactions, such as purchasing NFTs, trading, etc. Cold wallets are often used as storage or long term holdings.
Best Practices for Crypto Wallet Security
- Choose a reputable wallet provider. When selecting a crypto wallet, it is important to choose a provider with a good reputation for security.
- Use a combination of hot and cold wallets. To prevent your cold wallets from being compromised, it’s best to only make transfers to/from a cold wallet with another wallet you control. E.g. if you’re moving Ethereum from a cold wallet to purchase an NFT, instead of minting the NFT directly from your cold wallet, move the ETH to your hot wallet to make the transaction. This reduces the risk of your cold wallet from being compromised.
- Create a beneficiary plan. Ensure your family can recover your assets when you pass. Over $100B of digital assets have already been lost due to lost keys and death. Be sure to leave clear instructions with your family and walk them through the basics of digital assets.
- Use a strong password and 2FA when possible. Use a strong, unique password that is not used for any other accounts. Avoid using common words or phrases that can be easily guessed. It’s better to have a long memorable password, such as “coffeemakesmegofastandtastesgood” than a short, complicated one such as “coffee2go7$1”
- Keep your private keys safe. Private Keys are used to access your crypto wallet and should be kept in a secure location. Consider using a hardware wallet to store your private keys offline. Never, EVER share your seed phrase or Private Key with anyone.
- Be cautious of phishing scams. Hackers may attempt to steal your crypto by tricking you into revealing your private keys or login credentials. Be wary of unsolicited emails or messages and always verify the authenticity of the sender.
- Keep your software up to date. Make sure your wallet software is up to date to ensure the latest security patches are installed. This means keeping your browser up to date, as well as your firmware if using a hardware wallet.
Conclusion
Security is incredibly important when using cryptocurrencies. By following these best practices, you can reduce the risk of theft and ensure the safety of your assets. Remember to always be vigilant and cautious when managing your crypto wallet.
