Peter Kent - Cryptocurrency All-in-One For Dummies

For security purposes, a hardware wallet is an absolute must (and a bare minimum) for large crypto amounts. Keeping a ton of your assets on other, less secure types of wallets increases your risk of unrecoverable hacking attacks. Even safer than hardware wallets are paper wallets (see the next section).

TABLE 3-4Popular Hardware Wallets

Here are some advantages of hardware wallets:

They’re one of the safest crypto wallet options.

They’re great for storing large amounts of cryptocurrencies that you don’t want to use on a day-to-day basis.

Some disadvantages of hardware wallets include the following:

They’re the most expensive type of wallet.

They aren’t as user-friendly as other wallets, especially for beginners.

A paper wallet is a super-cold crypto wallet; see Table 3-5for examples. To use it, you print out your private and public keys. You can send funds by transferring the money to the wallet’s public address, and you can withdraw or send your currencies by entering your private keys or by scanning the QR code on the paper wallet.

Some of the advantages of paper wallets include the following:

They’re ultra hacker-proof.

You don’t store them on a computer, mobile phone, or third-party server.

TABLE 3-5Popular Paper Wallets

Paper wallets do have some disadvantages, though:

They aren’t user-friendly for non-geeks.

They’re harder to use for day-to-day transactions than other wallet types are.

They can catch fire.

Some paper wallet generators include WalletGenerator ( https://WalletGenerator.net ), Bitcoinpaperwallet ( Bitcoinpaperwallet.org ), and Mycelium ( https://mycelium.com/mycelium-entropy.html ). Book 2, Chapter 4has steps for setting up a paper wallet through http://www.bitaddress.org/ . Mycelium offers an original and even more secure way to generate paper wallets, with a USB device that you plug directly into your printer. The device generates a paper wallet that automatically gets printed out without ever having touched your computer.

Depending on your cryptocurrency needs and goals, you may need more than one type of cryptocurrency wallet. For example, Kiana uses cold wallets to store larger crypto reserves and hot wallets for active trading. Regardless, you can choose your cryptocurrency wallet (or wallets) based on different characteristics, some of which are discussed in the following sections.

Make sure you’ve gathered everything you need to know about a given wallet before committing to getting one.

Even if you’re an active crypto trader, we recommend that you have a super-secure cold wallet where you store your larger amounts of crypto assets. Online wallets aren’t the most secure option, however convenient they may be. You can always transfer your assets to an online wallet if you need immediate access to your cryptocurrencies for an investment or shopping opportunity.

Also remember that the most secure hardware wallets are normally the most expensive ones. So you should calculate whether spending that much money for a particular wallet makes sense for the amount of crypto you’re going to store in it.

Some questions you must ask before choosing the most secure wallet include the following:

What sort of authentication does the wallet use?

Is the website secure?

What do online reviews say?

CoinCentral.com , 99Bitcoins.com , and CryptoCompare.com are websites that provide an annual crypto wallet review. We recommend checking with two or more websites before making a decision.

At the time of writing, the Ledger Nano S hardware wallet is one of the most popular and highly rated secure wallets out there. You can find out about other Ledger products at www.ledger.com . The Trezor Bitcoin hardware wallet (created by SatoshiLabs) is another example. One catch about these wallets is that if the USB drive dies, all your cryptos go with it. That’s why you should always have a backup and keep your security codes elsewhere so that you can recover your assets.

Not all crypto wallets can handle your different types of cryptocurrency assets. In fact, some wallets are purpose-built for just one cryptocurrency; many cryptocurrencies have their own official wallets, which can handle only that one crypto.

For example, Bitcoin-specific wallets include Bitcoin Core Wallet ( https://bitcoin.org/en/choose-your-wallet ), Mycelium ( https://wallet.mycelium.com/ ), and Electrum ( https://electrum.org/#home ). See Book 3, Chapter 3for more about Bitcoin and wallets. For Ethereum, you have options such as Ethereum Wallet ( www.ethereum.org/ ) and MyEtherWallet (which is a paper wallet; see www.myetherwallet.com/ ). Book 2, Chapter 5has steps on setting up a wallet through www.ethereum.org/ . And Book 4, Chapter 5has more specific information about choosing an Ethereum wallet.