In order to facilitate assets’ longevity, investors must know how to safeguard their purchases. Given the risk of hacking that cryptocurrencies face, however, choosing the right wallet is crucial to making gains.
Since every buyer has a different risk tolerance, the digital coin market offers various methods of storage. Available options include everything from online, web-based wallets to colder alternatives that are hosted offline.
One of the most popular ways to store cryptocoin is to use the so-called hardware wallets. These are USB-like devices that allow the investor to keep their private keys offline. Although there are multiple options, the most popular ones are Trezor and Nano Ledger S. Some of the characteristics that make these wallets so appealing include the following:
Support multiple coins;
Provide an elegant device with an high-definition screen;
Compatible with Windows, Mac, Linux, and Chrome OS;
Unparalleled security due to the offline environment;
An effortless setup.
Moreover, hardware wallets are completely immune to any computer viruses that can adversely impact desktop or web wallets.
Keeping private keys safe hardly gets any better than relying on paper wallets. For those unfamiliar, this alternative is quite simple as it requires nothing more than a document for storing. Obviously, they are completely immune to any online viruses or hacking as they never come in touch with the online world.
Moreover, they are very cheap to obtain. The only necessary input that one may require is an online barcode generator. Some of the disadvantages, however, include the risk of physical theft. In other words, losing the document where the private key is stored could expose one’s coins. Other dangers pertain to damage caused by natural occurrences like flooding or fires.
Although storing one’s private keys on hardware or paper is generally preferred, these are not the most convenient options. After all, there are no tools that one can use to improve their portfolio if they have an offline wallet. When it comes to desktop options, however, there is an abundance of built-in resources. Consider, for instance, the number of different graphs that can help the investor analyze the market.
Also, desktop wallets are the easiest way for investors to download full blockchain node. In translation, they will permit the user to take advantage of the network’s full functionality. As far as some downsides, they do take a hefty amount of space and could require considerable time to download.
Making a Selection
Given the versatile types of wallets, investors face a tough decision. In fact, choosing how to store one’s coins is almost as important as choosing the coins themselves. This is where an analysis of a risk-to-feature ratio comes in. To properly make a wallet selection, every investor should understand what amount of uncertainty that they can tolerate.
For instance, people that are extremely risk averse will most likely lean towards paper or hardware wallets. Those who are fine with taking some chances, however, will consider desktop or web storing. In the end, the indirect relationship between risk and convenience will require the investor to make a trade-off.
Sometimes, buyers will have to store their coins on various wallets. This happens when certain altcoins are not accepted by one’s preferred method of storage. For instance, owning a Nano Ledger S will not mean that one can store all coins. So, having to use multiple platforms is understandable. As long as the combination of wallets is carefully considered, the safety concerns should be minimized.