‚The Compass‘ to find the Right Cryptocurrency Wallet For You
Crypto investments have a special feature that distinguishes them from other investments, such as securities: it is comparatively expensive to store the goods. Unlike in a stock market, there is not necessarily a third party which manages the ownership rights in the shares and can be verified by the proof of the identity.
Anyone who has already bought Bitcoins and loaded on his wallet knows that he is responsible for the storage itself. You need the public and private keys to access the bitcoins. If you lose it, you can not gain access to the bitcoins. We therefore briefly explain in this paper what to look for in the storage of cryptic diseases.
1. Central storage of tokens
This is actually contrary to the principle of decentralization and should only be used in exceptional cases. If you store the coins on a central platform where you can only identify yourself with a normal login and then have access to the coins, you should be careful.
You should always keep in the back of the head: it is only digital goods, which have a price, not necessarily a value. Only with ICO’s it can happen that one gets first on the platform coins well-written. Only when the system is then live, the „real“ coins are transferred to the wallet.
– It could be that the platform offers a worthless currency from which it can sell infinitely many instances, because it is ultimately only a number on the platform.
2. Own Wallet
Your own wallet is ultimately nothing more than a program that manages your public and private keys. It also ensures that your credit is displayed, usually by downloading the blockchain.
In addition to the programs, there are other types of wallets, such as paperwallets or brainwalls.
One of the best-known and most favorable methods for safe storage of bitcoins are paper wallets. There are many different suppliers of paper wallets that create a Bitcoin address for users and print with two QR codes on paper: A QR code includes a public address to receive bitcoins and the other QR code the private key for storing and sending bitcoins.
+ A big advantage of the Bitcoin Paper-Wallets is that the private keys are kept 100% offline and thus not a target for Cyberattacks.
– Depending on the Coin it is extremely tedious to get them back from the Paper Wallet online again.
We recommend you a Hardware Wallet rather than a Paper-Wallet. The Hardware Wallets are still very limited. They offer the possibility to keep the private keys electronically and make payments.
The Trezor Hardware Wallet can be purchased on the company’s website (Satoshi Labs, 99 USD) or through Amazon.
3. Online Wallet
Bitcoins are a highly modern equivalent to cash. The number of companies that accept Bitcoin as a means of payment increases daily. In addition to know how Bitcoin Mining works and how a Bitcoin Transaction is performed, is essential to deal with the different ways Bitkoin is kept.
There are special vendors who offer an online wallet, almost as a cloud solution. It should be mentioned that one places the trust in a third party again. Finally, the platform must process the data securely, otherwise there may be considerable security gaps.
Web-based wallets keep the private keys online on a server managed by an external party.
+ A great advantage of the online wallets is their availability. All that is required is an Internet access on a mobile terminal.
– A disadvantage of online wallets, however, is that the keys are managed by external companies. Correspondingly, the user can not check whether the servers of the providers are sufficiently secured.
In addition, the external provider theoretically has full control over the users bitcoin levels. Coinbase is a worldwide Bitcoin stock exchange and a bitcoin wallet at the same time. Users from the USA and Europe can buy and store Bitcoin. Circle also offers its users the opportunity to buy and store Bitcoins worldwide. In the US, users can connect their bank account directly to the Bitcoin platform. Users from Europe can purchase bitcoins with credit card. Blockchain is also a well-known provider with several million users.
Are Bitcoin Wallets Safe?
The security of Bitcoin Wallets is closely linked to the user’s caution. The private key is the only way to access bitcoins in a wallet. If the user loses the key to his wallet, he also loses the bitcoins in the affected wallet. Wallets are therefore only safe to the extent that the keys to them are safely kept. As long as nobody gains access to the keys, no one gets to the bitcoins in the wallet.
Are Bitcoin Wallets Anonymous?
On the one hand, the entire Bitcoin network is anonymous. On the other hand, all transactions with their associated bitcoin addresses are documented transparently and clearly in the blockchain. Correspondingly, it is called correct bitcoin as pseudoanonymous rather than anonymous.