Peter Kent - Cryptocurrency All-in-One For Dummies

If you’re not planning to diversify among other types of cryptocurrencies, a singular official cryptocurrency wallet may be right for you. Most of the time, you can find the official wallet of a cryptocurrency on the company’s website.

Multicurrency wallets are an option for people who want to hold more than one cryptocurrency. The majority of online wallets provided on the exchanges (introduced in Book 5, Chapter 3) give you the opportunity to store and transact among multiple cryptos. However, if you’re using these wallets to store your crypto assets, know that your wallet security may be compromised.

We do not recommend leaving your coins in an online exchange wallet.

Coinomi ( www.coinomi.com/ ) is a popular multicoin mobile wallet. It supports more than 200 different digital tokens and a number of blockchains. It’s a great multi-asset cryptocurrency wallet. Exodus ( https://www.exodus.io/ ) is another multicoin wallet. Your private keys remain secure on your device and never leave it. Exodus can even encrypt the private keys for you.

If you’re planning to do a lot of crypto shopping and use digital coins on the go, you may need to be mindful of the transaction fees you’re paying along the way. This point is especially true for active traders. If you’re a day trader and you’re paying more on transaction fees than what you’re making in the market, doesn’t that defeat the purpose of trading?

Anonymity is an extra layer of security you can take into consideration when choosing a crypto wallet. If you use an anonymous wallet, you can separate your personal information from your funds, therefore making it harder for anyone to track down your cryptos and potentially steal them. This factor is something that can be very personal. Some wallets offer full anonymity, while others don’t. If anonymity is something that’s really important to you, choose among more-private wallets. Note that prioritizing anonymity may affect transaction fees and the price of the wallet.

To find the latest, most popular anonymous wallets, you can simply search the term “anonymous cryptocurrency wallets” on your favorite search engine. Anonymous wallets come in the forms of mobile, hardware, software, and so on. You can have one or more anonymous wallets based on your needs. Some of the popular anonymous wallets at the time of writing include the following.

BitLox: This hardware Bitcoin wallet ensures both security and anonymity. It’s capable of holding over 100 wallets with the ability to create millions of addresses for each wallet. Check it out here: http://www.bitlox.com?ref=196 .

Electrum: This desktop Bitcoin wallet appears to be one of the most trusted software wallets by the cryptocurrency community. Check it out here: https://electrum.org/#home .

Samourai: This wallet is a mobile Bitcoin wallet. According to the Samourai website, their aim is “to keep your transactions private, your identity masked, and your funds secure.” You can check out the company here: https://samouraiwallet.com/index.html .

After you’ve selected the cryptocurrency wallet (or wallets) aligned with your goals, you want to actively keep your investment safe. No matter how secure a wallet is, you still need to take personal steps to enhance that security, just like you’d do with your traditional personal wallet. Because you may be storing a higher value in your cryptocurrency wallets, keeping them safe becomes that much more important. This effort is basically the price you pay for wanting to manage your own money without having to rely on third parties, governments, and big banks. Here are some tips on keeping your wallet safe.

Back up your cryptocurrency wallets like you back up your photos, work files, and computer data. A backup of your wallet can protect you against computer failures and many human mistakes. It can also allow you to recover your wallet if your mobile phone or computer is stolen. Of course, you need to keep your backup wallet in a safe place, away from your original wallet. And make sure you back up regularly to ensure that all recent crypto addresses are included in your original wallet.

Additionally, you should also consider keeping a backup of PIN codes, usernames, and passwords if your wallet provides these features. This measure is a backup in case you forget these things. A hidden file with these items on a secure local cloud for your personal use is a good choice as it’s almost impossible to hack.

It’s diversification time, baby! If you’re having a hard time choosing among the many secure wallets, don’t worry. Keeping your assets across multiple wallets is actually a great practice anyway. That way, if any of your wallets are somehow compromised, you don’t go bankrupt of cryptocurrencies.

A good combination is using two or more hardware wallets for larger crypto amounts, with the rest of your smaller amounts spread across mobile, desktop, or online wallets, depending on your everyday use of cryptocurrencies. Of course, all these need to have their own specific backups (as explained in the preceding section).

You can add to the security level of your wallets in a number of ways. Here are some suggestions:

Use two-factor authentication (2FA). If your wallet allows it, two-factor authentication is a great way to take the security of your wallet to the next level. It’s simply a double authentication of who you are, though it can be done in different ways. The Google Authenticator app, which provides a six-digit code that changes every minute and is unique to you, is one option.

Encrypt your wallet. Encrypting your wallet or your smartphone allows you to set a password for anyone trying to withdraw any funds. This act helps protect against thieves, though it can’t protect against keylogging hardware or software (which tracks your keystrokes). You should also consider encrypting your backups. Note: Some methods to encrypt may need a bit more technical familiarity. The best way to encrypt your wallet is to contact your wallet provider for more information.

Use a strong password. A strong password must contain letters, numbers, and punctuation marks and must be at least 16 characters long. Avoid passwords that contain only letters, only numbers, or only symbols. Recognizable English words are also a no-go because they’re easy to break. You can make a very long, strong password by memorizing a pattern on your keyboard instead of selecting a word. For example, start from the left side of the keyboard and type, top to bottom, the keys along the lines of this pattern (using the shift key after the last lowercase letter): 1qaz2wsx!QAZ@WSX. It’s an extremely strong password, and you don’t have to memorize it! Of course, if you try to log in to your software from a mobile phone, things can get complicated.