As cryptocurrency ownership becomes more and more popular, owners will need to think about how to protect and hold their assets. The safest option is to store the cryptocurrency in a personal wallet.
Cryptocurrency wallets are software that allows users to store, send, and receive cryptocurrency. Each wallet has a private key that allows wallet spending. Private keys are cryptographic strings of code that allow owners to spend money within the wallet, as well as to prove ownership. Wallet information is also stored offline, which reduces the risk of a hacking attempt. Everyday non-technical crypto users can benefit from increased security, but it may come at the expense of convenience, depending on their needs.
What is a guard wallet?
A hedge wallet is a type of online cryptocurrency wallet that is run by a third party, such as an exchange, after users make their first cryptocurrency purchase. In other words, the exchange is the custodian responsible for safely keeping the user’s funds and keeping track of the keys. The bulk of client funds are placed in cold storage hardware wallets of major cryptocurrency exchanges in the United States.
A guard wallet is less secure than a non-custodial wallet. However, many people still choose it because it is easier to use and involves less responsibility. If users forget their exchange account password, they can most likely reset it through applicable identity checks.
What is a non-wallet wallet?
With a non-custodian cryptocurrency wallet, users are the sole custodians of their private keys, and thus the assets that are stored. A non-custodial wallet because it eliminates the need for a trusted third party and, in some ways, is more secure than custodial wallets.
There are many different types of non-preemptive wallets, including browser-based wallets, software wallets for mobile phones, computers, and hardware wallets. Hardware wallets, which come in various formats, are said to provide the highest level of security for crypto storage. These cryptocurrency wallets are similar to USB drives but have a display and physical buttons instead.
Hiccups with non-prudential wallets
Non-preemptive wallets are easy to set up. For non-maintained software wallets, owners need to download the wallet, back up the initial recovery phrase, a key of 12, 18 or 24 random words, and set a password.
Furthermore, if users forget their password, the initial statement acts as a backup from which they can access their assets.
Furthermore, there is little support for hardware wallet users if users lose their keys or fail to take necessary operational security measures to secure their password and keys. If the user loses, deletes or forgets his key, he risks losing access to his funds entirely.
Therefore, in order to adequately protect this information, non-custodial wallet users are required to take additional measures to ensure the security of the password and wallet.
Related: Simple Steps to Keeping Your Encryption Safe
When securing seed phrases, the usual advice for users is to write them down on a piece of paper and keep them stored in a safe place. However, it is generally not recommended for users to keep raw statements stored in text files on PCs or mobile devices. For example, PCs and Android devices are vulnerable to viruses, while notes stored on iPhones can be hacked if a user’s iCloud account is hacked. So, instead, the best practice for keeping seed phrases safe is to keep them offline.
There are additional methods that users can take to secure their initial statements. For example, Serenity Shield is a digital storage platform that enables users to restore their initial phrases if they are lost via its Strongbox feature. The seed information is on the blockchain as a non-transferable token (NFT). This way, only the owner can access and read the information stored in Strongbox.
Other than concerns about keeping it secure, the mechanisms for sending transactions on non-protected wallets can also be a challenge for newcomers in the crypto space.
Most non-protected wallets require users to pay for transactions using the native cryptocurrency of the network on which the token is built. For example, if a user wants to transfer Tether (USDT) on Ethereum, they must have Ether (ETH) in their wallet to pay for the gas. Therefore, users will have to buy ETH and then transfer it to their wallet before they can convert USDT.
However, hot wallets on exchanges enable users to pay for transactions using the same token. For example, crypto exchange Binance allows users to pay for Tether transactions using USDT instead of ETH or other network tokens it works on like BNB or Tron (TRX). Since users do not need to keep the original network token, token transfers are simplified.
Some in the crypto space believe that non-wallet wallets are still impractical for ordinary users who may not care about backing up themselves.