Every day, the number of people using blockchain technology and Cryptocurrencies is growing. Virtual currencies, just like fiat currencies need to be stored. However, unlike hard currencies that require a physical wallet, Cryptocurrencies are stored in digital wallets. Crypto traders have a wide selection of wallets to choose from. However, most of them find it challenging to select the best wallet for their coins.
Digital Wallets Definition
A digital wallet can be defined as a virtual storage of Cryptocurrency user’s payment and identification information. The users can also use the digital wallets also called e-wallets along with mobile payment services. Due to the complication blockchain, the technology used in the Crypto sector, the digital wallets are quite different from the regular e-wallets and the users need effort and research to identify their ideal ones. Crypto traders may choose to use paper wallets, hardware wallets, desktop wallets, or online wallets.
Online Cryptocurrency wallets run on the cloud. This enables them to be accessible from any location through any computing device as long as there is an internet connection. GreenAddress and many exchanges that offer coin storage services are perfect examples of online wallets.
Online wallets are especially popular as they are more convenient to access than most of the other types of wallets. Furthermore, most of them provide their users with extra services through their multiple features. Many users consider them to be practical. Many Cryptocurrency trading platforms have integrated wallet allowing their customers to transact and trade on one platform.
Disadvantages of Online Wallets
Online Cryptocurrency wallets are dependent on servers. You cannot access your Cryptocurrencies when the server is down. Your use of the wallet is dependent on third-party wallet provider. Furthermore, some wallets set the maximum amount you can transact in a day.
To use online wallets, you must be connected to the internet. This weakens these wallets on security. Moreover, whereas it is quite difficult to hack the other types of wallets, hackers have an easy way of accessing online wallets. With your public and private keys stored in a server, they may be stolen when the server is compromised.
How to Keep Your Online Wallet Secure
To make your online wallet more secure, consider introducing extra security layers. Using more layers of security will only make your Bitcoins, Litecoins, Ethereums, and other coins more secure. Using two-factor authentication can make your wallet more secure. Furthermore, you should consider introducing additional pin whenever a wallet application is open.
Setting long and complex passwords can make it harder for a hacker to steal your funds. You should avoid short passwords at any cost. However, when using long passwords, it is advisable to write them down not to forget them.
You should regularly update your software. Whether it is on your mobile or computer, having updated software means your device has the latest security enhancements. Also, use wallets with a good reputation to ensure that your efforts pay.
Given the vulnerability of online wallets, it is advisable to store most of your coins in high-security places. After storing only small amounts of your Cryptocurrencies in your online wallet, you should consider cold or offline storage options for the remaining coins.