Crypto hot wallets and enhancing their security
A bit about a crypto wallet – Bitcoin or crypto, in general, is the thought in most investors’ minds and more people are engaging in it at a rapid rate. And when one wants to buy something, they very surely would like to store them, as in, without a storing system, there can never be a transaction possible.
And that storing place for crypto is what we call a Crypto wallet. A crypto wallet has a private key and a public key. Public keys derive the crypto wallet addresses which we need to receive coins, while private keys are confidential data that shouldn’t be shared since they are the keys to prove ownership of the wallets.
Types of wallets?
Based on where the private keys reside, there are mainly two types of wallets, Hot and Cold.
For cold wallets, like paper wallets and hardware wallets, the private keys are never connected to the Internet and hence, there is very little chance of it being hacked or stolen unless one steals the paper or device of the hardware wallet itself.
However, for hot wallets, the wallet and its keys stay connected to the internet, and hence, it is important for us to follow some rules to keep our coins safe.
Hot wallets include custodial wallets, that are assigned to us by exchanges. These wallet keys stay with the exchanges so the ownership of these wallets stays with the exchanges. For these reasons, it is very important to choose a very reputed and trusted exchange so the chance of being looted is less. A strong password with 2FA enabled must be set up.
Other hot wallets include web wallets like MetaMask, desktop wallets like Exodus, and mobile wallets like Trust, etc. For these wallets, the private keys stay with us and we back the wallet up with a seed phrase that can unlock the wallet and is the way for us to prove our ownership of the wallet, do transactions, and recover it if lost. Hence, it is very important to keep the phrases which are often 12 or 24 words written down and put in a safe place for to not lose it and should ensure that it is hidden so no one can get it else they will be able to steal all coins from the wallet.
It is also important that while using these wallets, one must use good anti-virus software on their device to stay protected from malware or viruses that might copy or leak information about the wallet or anything related to it. It is also very advisable to not use these wallets when browsing the internet on a public Wi-Fi or cybercafe because anyone on that network might be able to track our activities and details about the wallet as well. Locking these wallet apps with very strong passwords for opening and for transactions is of vital importance since it minimizes the risk of us losing our funds if the device is lost and gets into the wrong hands who can directly open the wallet and do as he, please.
All crypto wallets are generally safe, we just have to take good precautions and don’t commit silly mistakes like forgetting where we kept the seed phrase written or having our recovery phrases or private keys written or uploaded for references from where it might get leaked or hacked. We have to understand that there are lots of scammers and hackers on the internet and it would be not too wise to not take stern precautions when it comes to managing crypto bought from hard-earned money!