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Their security is only your concern<\/strong><\/p>\n Traditional currencies like USD and EUR can be stored in banks or wallets. But with cryptocurrencies, it might get little complicated, there are no centuries-old institutions you can rely on to keep them safe for you. And no recourse if you lose them. That\u2019s why it\u2019s important to get your head around the different ways you can store them and decide which one is right for you.<\/p>\n The list below are the different types of wallets from least secure to most secure, and show you the advantages of each. Then we have a special feature from one of the Crypto expert in the space, Sam Volkering, on how to avoid getting scammed.<\/p>\n By the time you finish reading this you should have a good idea of which wallet is right for you, and how you can avoid losing all your cryptos to scammers. Hopefully today\u2019s piece will save you a lot of heartache and lost money in the future.<\/p>\n A wallet on an exchange, such as Bittrex, Binance, or Coinbase provides you with the lowest level of security. But you will need to have your cryptos on here at some point because this is where you buy and trade them.<\/p>\n Well, you kind of have to. You have to transfer your cryptos to an exchange to trade them or buy them online. The best practice is to only keep the cryptos you\u2019re actively trading on your exchange wallet and keep the rest in a safer wallet, which you have control over.<\/p>\n A web wallet is hosted online, and again is created just like an email address.<\/p>\n If you don\u2019t have much money in cryptos, and want easy access, a web wallet can be a good option. But make sure they give you access to your private keys and download your keys or write them down on paper. Then if something goes wrong you can usually recover your cryptos.<\/p>\n This is a program or app that runs on your computer or mobile phone.<\/p>\n Should you use one?<\/strong><\/p>\n The main thing to watch out for with these wallets is malicious software. Many people end up losing their cryptos to hackers in this way. These programs are usually hidden in software you might download to trade automatically for you known as trading bots.<\/p>\n Still these wallets are safer than a web wallet because you\u2019re not relying on a third party to secure your cryptos. Again, though, you should write down your private keys when using these wallets. That way if your computer or phone breaks or gets stolen you can restore your wallet.<\/p>\n People talk about \u201ccold\u201d and \u201chot\u201d wallets. Hot wallets are connected to the internet and cold wallets are not. All of the above are hot wallets. A cold wallet is stored on a device that isn\u2019t connected to the internet.<\/p>\n So for instance, if you download your wallet file from myetherwallet.com and store it on a USB stick, this would then be a cold wallet. The USB stick isn\u2019t an internet enabled device.<\/p>\n It doesn\u2019t have to necessarily be stored on a USB stick. You could put the wallet file on a memory card or an \u201cair gapped\u201d computer (a computer that has never and will never be connected to the internet).<\/p>\n If you don\u2019t trade too much, this is a good, secure option. It has much less chance of being hacked than any of the above wallets.<\/p>\n It is still hackable though. But because you\u2019re only connecting it to your computer to trade, there\u2019s less chance it will get hacked. You can also virus scan your computer before you connect your wallet to make doubly sure.<\/p>\n If you want to go to extra trouble, you can also make a cold wallet almost un-hackable by creating it offline and only using offline transactions. But this is time-consuming and tedious to do.<\/p>\n This is just the private key of your wallet either written down or printed out on paper. Most cryptos have paper wallet generators you can use to make these wallets. You can find these on the crypto\u2019s official website.<\/p>\n If you just plan on holding your cryptos for a long time and not trading them, this is the cheapest and easiest option. You simply generate your paper wallet, send your cryptos there and forget about it.<\/p>\n You can check if your cryptos are still on the wallet easily with your public key. For instance, to check the balance of your ether wallet, you just put your public key (not your private key!) into etherscan.io.<\/p>\n Just as with a cold wallet, if you\u2019re trading regularly, a paper wallet isn\u2019t really any safer than a web or desktop wallet. You still need to type in your private key every on your computer time you use it. If your computer has malicious software on it, you could still lose your cryptos.<\/p>\n One good tip if using a paper wallet is to write it down with one or two digits changed (so long as you can remember which ones you changed!). That way, even if someone finds it, they won\u2019t get access to your cryptos.<\/p>\n These are a more sophisticated type of cold wallet. They are essentially tiny computers cased inside USB sticks. The two leading companies are Trezor and Ledger, and they are both very well regarded.<\/p>\n Hardware wallets give you all the advantages of a cold wallet or paper wallet, with the speed of a desktop or mobile wallet. They are also much more secure than any of the other types of wallet and very easy to use. But they cost around \u00a3100.<\/p>\n Your private keys are stored, encrypted, on the device. So no one can see them. Even the computer you connect your wallet to when you use it to trade can\u2019t see them. So in theory, hardware wallets cannot be hacked.<\/p>\n And if you lose it, or even if someone steals it, it\u2019s not the end of the world.<\/p>\n If someone finds your Trezor or Ledger wallet they still need your pin code to use it. And with every wrong attempt the time they need to wait before they can try again doubles. After a few wrong attempts they are locked out for years. This means they can\u2019t be cracked by a password cracker.<\/p>\n When you set up your device you also create a \u201cpassphrase\u201d of 20 or so words. You write these down on paper and store them like you would a paper wallet. This passphrase can be used to restore your wallet if you lose or break your device.<\/p>\n Honestly, if you have the money \u2013 and if you have the spare cash to invest in cryptos you really should \u2013 just get one of these.<\/p>\n They are faster, easier to use and safer than all the other methods, and they can store a large variety of different cryptos. So you don\u2019t end up trying to keep track of multiple different wallets for your multiple different holdings.<\/p>\n Both Trezor and Ledger are great. I\u2019d say just pick whichever supports more of the cryptos you hold. They both support bitcoin, Bitcoin Cash, Ethereum and all Ethereum tokens.<\/p>\n Here are the official sites:<\/p>\n trezor.io\/<\/strong><\/a> However, even with hardware wallets, we\u2019re still left vulnerable to the \u201csock drawer attack\u201d.<\/p>\n So, you have your cryptos super securely stored on a hardware wallet. And you have your passphrase written down on paper in case your wallet breaks or gets lost.<\/p>\n But now, you\u2019re vulnerable to the sock drawer attack, as perfectly illustrated by this cartoon.<\/p>\n So, when storing your passphrase, it\u2019s a good idea to either write it down in a code that only you know, or to store it like any other valuable \u2013 in a safe.<\/p>\n It\u2019s quite funny that one of the best places you can store your passphrase is in a bank\u2019s safety deposit box, given that bitcoin was created as an alternative to our current corrupt banking system.<\/p>\n Keeping your crypto safe means storing them correctly as we\u2019ve just explained. But it also means knowing how to spot and avoid scams as well.<\/p>\n At some point you\u2019ll need to transfer your crypto from one location to another. That might be to pay for goods and services. It might be to simply exchange for other crypto tokens. It may be to contribute to an initial coin offering (ICO).<\/p>\n Whatever it may be you need to make sure you\u2019re not playing into the hands of scammers. You need to make sure that your crypto gets to where it needs to be. Unfortunately the sad thing is every day we see victims of scams.<\/p>\n Here\u2019s two of the most common ways people fall for scams in the world of crypto.<\/p>\n This is a classic scam technique and one to\u00a0easily<\/em>\u00a0avoid. Often when sending crypto to an ICO or to an exchange you need to generate a receiving address. Often you simply go to the project or exchange website and get the address details.<\/p>\n However smart scammers have figured out they can perfectly replicate websites to look\u00a0exactly\u00a0<\/em>like the legitimate site. Then they embed a fake address for you to send crypto to.<\/p>\n However these are fake sites and scam addresses. And when you send crypto to these scam addresses, that\u2019s it, say goodbye to your crypto. Now while the fake sites can look exactly the same there will\u00a0always<\/em>\u00a0be one difference \u2013 the actual HTML address.<\/p>\n For example a legitimate site address may look like: Notice a difference? Take a closer look. In the fake one \u201ctokensaIe\u201d includes a capital \u201cI\u201dwhereas the real site uses an \u201cl\u201d.<\/p>\n Or here\u2019s another example of what a legitimate address may be: This time the only difference is two underscores (\u201c_\u201d) in the address. That\u2019s all it takes. Just tiny differences in the web address and scammers can have their way.<\/p>\n That\u2019s why one of the most important things you can do is to double-check the right address. And avoid clicking links where possible. Always do your best to input the right web address yourself<\/p>\n We all have registered our email address at one point or another with a crypto project. Sometimes to receive updates. Sometimes to get on a whitelist. But hackers sometimes get a hold of our email addresses.<\/p>\n And they know that in the crypto world there\u2019s a lot of \u201cfear of missing out\u201d (FOMO). They play to this fear and during token sales will often send out mass emails claiming \u2018time is running out\u2019 or the sale \u201cis offering a new bonus to reward early adopters\u201d.<\/p>\n Any offer of an extra reward of free tokens or anything the project hasn\u2019t officially mentioned is likely a scam. The scammers will also give a crypto address to send tokens to so you can \u201cget your special access\u201d. That\u2019s a big red flag.The six types of wallet \u2013 in order of security<\/strong><\/h2>\n
1. \u00a0Exchanges<\/strong><\/h3>\n
Advantages:<\/strong><\/h4>\n
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Disadvantages:<\/strong><\/h4>\n
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Should you use one?<\/strong><\/h4>\n
2. Web wallets<\/strong><\/h3>\n
Advantages:<\/strong><\/h4>\n
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Disadvantages:<\/strong><\/h4>\n
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Should you use one?<\/strong><\/h4>\n
3. Desktop or mobile wallet<\/strong><\/h3>\n
Advantages:<\/strong><\/h4>\n
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Disadvantages:<\/strong><\/h4>\n
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4. Cold wallet<\/strong><\/h3>\n
Advantages:<\/strong><\/h4>\n
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Disadvantages:<\/strong><\/h4>\n
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Should you use one?<\/strong><\/h4>\n
5. Paper wallet<\/strong><\/h3>\n
Advantages:<\/strong><\/h4>\n
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Disadvantages:<\/strong><\/h4>\n
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Should you use one?<\/strong><\/h4>\n
6. Hardware wallet \u2013 seriously, just use this<\/strong><\/h3>\n
But what if you lose it?<\/h2>\n
\nledgerwallet.com\/<\/strong><\/a><\/p>\nDon\u2019t forget about your passphrase<\/strong><\/h2>\n
How to spot scams \u2013 by Sam Volkering<\/strong><\/h2>\n
1. Web addresses<\/strong><\/h3>\n
\nhttps:\/\/tokensale.project\/pre_sale
\nAnd examples of a fraudulent site might look like:
\nhttps:\/\/tokensaIe.project\/pre_sale<\/p>\n
\nhttps:\/\/project_crypto.info
\nAnd a fake one:
\nhttps:\/\/project__crypto.info<\/p>\n2. FOMO emails<\/strong><\/h3>\n
\nYou need to check the sender of the emails and always check the legitimacy with developers. FOMO emails are one of the easiest ways to fall victim to scammers.
\nSo there you have it. If you follow the advice we\u2019ve given you today you should be able to stay a lot safer in the world of cryptos.<\/p>\n