With all the talks about hacked exchanges and crypto wallets, one has to wonder how to ensure the safety of his funds. Are blockchain wallets safe? Do they need additional layers of security?
In this section, we will answer all these questions.
Are Blockchain wallets safe?
A Blockchain or cryptocurrency wallet is specialized software, designed to keep your crypto secure and easily accessible.
They come in many different types and offer various levels of security. These are the main categories of wallets, from the least to the most secure:
- Online – web-based wallets
- Mobile – apps installed on smartphones
- Desktop – software installed on computers
- Paper – printed wallet credentials
- Hardware – USB-like physical devices
All the above wallets are safe to use. Your funds will only be in danger is a third party is able to access your funds.
In the case of online wallets, it is often so that the wallet provider has a copy of your keys. This makes the particular type of wallet less safe than other options.
If you want to invest in the safest possible option, go with a hardware wallet.
How do blockchain wallets store your funds?
Blockchain wallets do not really “store” your funds. Cryptocurrencies are digital representations of value on the Blockchain and your wallet is your access point to them.
Crypto wallets store the two unique codes that are needed to receive and use your cryptocurrencies:
- The private key – used to spend your coins and sign the transactions.
- The public address – needed whenever you request or receive coins.
What are the best safety practices?
Take note that when handling cryptocurrencies, you are the only one that is responsible for their safety. As such, you need to take the necessary safety precautions.
In that regard, here are some of the best practices you should be using when handling a Blockchain wallet:
- Backup your private keys – whenever you are creating a cryptocurrency wallet. Write down your private key or the seed phrase on a piece of paper and keep it safe.
- Limit your usage of online wallets to a minimum – these wallets are prone to phishing scams, so use them sparingly and never deposit large amounts on this type of wallet.
- Take extra care of your mobile device and desktop by installing the latest antivirus and firewall software.