What Is a crypto wallet?
Although we talk about cryptocurrency as if it's the same as your usual bank assets, crypto is unique in how it works. At their core, crypto wallets are the means to store private keys, which provide ownership and enable transactions within the blockchain network. Private keys are cryptographic codes that serve as digital signatures, allowing users to prove ownership of their digital assets and authorize transactions.
A crypto wallet acts as a secure repository for these private keys. It not only stores the keys but also provides a user-friendly interface for managing and interacting with various cryptocurrencies. Think of a crypto wallet as a virtual wallet that allows users to access, send, receive, and monitor their digital currencies.
It's important to note that while crypto wallets facilitate the storage and management of private keys, they do not actually "hold" or store the cryptocurrencies themselves. The digital assets remain on the blockchain, and the wallet merely provides access to them through the private keys.
With these keys, the wallet allows you to:
First, it allows you to prove ownership of the digital currency
Secondly, the crypto wallet makes buying, selling, and trading cryptocurrency simple and easy for the user.
Lastly, it will enable you to easily access multiple crypto casinos, take advantage of their different offerings without having to leave your stash in the casino's hot wallet for long, eventually becoming a liability.
Types of wallets
There are various types of wallets. Each has its own purpose and caters to specific audiences. The wallers can vary from online apps to a piece of paper with a QR Code. Let's break down some basic types of wallets.
Paper wallets consist in printing the private keys on paper, providing offline storage for enhanced security. While you may think that any notebook will do, there are many paper and metal options available to safely store your private key or seed phrase:
The Billfodl is a device made out of steel that will protect your seed phrase from fire, water and rust. There are many similar options from other manufacturers that you might want to consider but you can also try to make your own if you are any good at DIY for much cheaper.
The Stonebook is made out of stone paper, a mixture of limestone/marble waste and resin, which makes it water resistant and tear proof. You can also increase the security by adding the Ghost pen, an invisible ink pen that can only be seen under UV light.
A Hot Wallet is a On-the-go wallet that is connected to the internet and is specifically designed for ease of transactions and interacting with Web 3 crypto services. It is typically implemented as software, available as applications or online services that run on devices such as computers or mobile phones.
Hot wallets offer immediate accessibility to cryptocurrencies, enabling users to send, receive, and transact with their digital assets in real-time. While they provide convenience and ease of use, hot wallets are more susceptible to online security risks such as hacking, phishing attacks, and malware. Therefore, it is important for users to implement robust security measures, such as enabling two-factor authentication and regularly updating the wallet software, to mitigate the risks.
In order to use a Hot wallet, you will need to import or create a wallet and save your seed phrase which is a list of 12 or 24 words that will grant you access to your wallet, in addition to the login password. It is imperative to store these words properly and to not share it with absolutely anyone.
Here are popular Hot wallet options:
Samourai Wallet is a privacy-focused mobile wallet designed for Bitcoin users seeking advanced security features and anonymity. Popular for preserving user privacy through innovative tools and techniques. Samourai Wallet offers features such as coin mixing (using the Whirlpool protocol), which helps obfuscate transaction trails and enhance privacy. The wallet also features the offline mode which enables users to interact with their Bitcoin off the grid through SMS or mesh networks.
Xverse is a Hot Wallet for Bitcoin that also supports Ordinals (the equivalents of NFT’s on the Bitcoin blockchain) and Stacks (a smart contract layer 2 for Bitcoin). Xverse also will let you stake your Stacks (STX) to earn rewards in the form of Bitcoin, and interact with dapps of the Stack ecosystem.
ZenGo is a widely supported hot wallet in the form of a mobile app. The wallet is extremely user-friendly and is one of the few crypto platforms that doesn't require KYC. The wallet includes a few additional features, such as buying and selling crypto within the dApp.
Zengo makes security a priority and includes security features such as 3-factor Authentication, Biometric Encryption, MPC Encryption, and more. This is the best crypto wallet for online gambling, short-term trading, and remaining secure.
PINT wallet is the best on-the-go crypto wallet with top-tier features available through your mobile. The wallet only supports a few cryptocurrencies, but the wallet has a focus on Anonymity and user security which is why they allow users to use features such as its P2P marketplace, encrypted chats for Buyers and Sellers, in-wallet exchanges, and even escrow payments. Users can even remove their private keys to store in paper wallets or move them to hardware wallets.
The wallet is fast and easy to set up and provides its users with rewards as they use the platform. Overall it's easily one of the best crypto wallets.
MetaMask is easily one of the most popular crypto wallets. They have plugins on multiple casinos and crypto platforms to make things easier for the users. The platform is anonymous, doesn't require any KYC, and doesn't store any user data. You don't even need an email to set up an account.
They include a few features, such as NFT support, multiple wallet addresses, and swapping of currencies. They have great live chat customer service and are supported by 21 million active users.
Hardware wallets / cold wallets
Hardware wallets are devices designed to securely store your private keys and manage cryptocurrencies. In principle these devices provide an offline, cold storage solution that enhances the security of digital assets by keeping the private keys offline and isolated from online threats.
These devices typically feature a small screen and physical buttons for user interaction, which allows users to verify and confirm transaction details directly on the device. Similar to Hot Wallets, these devices will also generate or require a 12 or 24 seed phrase which can be used to import or open your wallet in a different device, in case the previous one is lost or damaged.
Another extra security feature of some of the hardware wallets is that they are air gapped, meaning they are not connected to the internet in any way. All interaction is done through QR codes and even if there was a malicious URL link embedded in the QR code, the device wouldn’t be able to open it since it has no access to the internet.
The Ellipal Titan and the Ellipal Mini are air-gapped hardware wallets that operate without the need for a direct internet connection, to avoid potential risks. The device has a built-in camera that scans QR codes for convenient transaction verification and a disassembly proof design to secure from any type of physical tampering of the device.
Block Stream Jade
The Blockstream Jade is another air gapped device that features a camera for transactions through QR code. The wallet supports Bitcoin and Liquid (Layer 2 solutions for Bitcoin) and while it may seem like a bad purchase in terms of the number of coins supported, potential buyers should keep in mind that in this instance less is more. Blockstream is a good alternative because every coin supported by a hardware wallet is potentially a new attack vector to the security of the device.
The Keystone Pro takes air gapping to the next level by removing Bluetooth connectivity and only allowing Firmware updates through a micro-SD card. Similar to other hardware wallets all interactions are done through QR codes but it also has a self-destruct mechanism. Yes, you heard that right, when the device detects disassembling of the device it will wipe out all information stored inside.
The wallet has multiple models, but the most popular is the Ledger Nano S Plus. The offline wallet gives full control to the user and can only be accessed when unlocking the device using a unique password while plugged in using the USB-C cable that the wallet comes with.
The wallet is not the most user-friendly and requires a bit of basic crypto knowledge plus additional research to make sure that you keep your funds secure and accessible. But it helps the user remain %100 is anonymous using the Ledger-created proprietary operating system. The hardware wallet costs about $80, which is reasonable for its functionality when comparing it to alternative hardware wallets.
This credit card sized hardware wallet has bluetooth connectivity and a battery that will last 2 to 3 months on standby. The perfect option to fit in your physical wallet and way more discreet than the bulky and quite popular competitor device. You can also buy the previous version which is $40 cheaper and still stores over 10 000 coins.
Dangers of wallets
Crypto wallets and crypto, in general, have a few flaws that could lead to you losing your funds or turning your effort to find anonymity pointless. Here are a few risks of using crypto wallets
As crypto wallets give all the responsibility to the holder, user errors can lead to losing access to your wallet and its funds. Some common mistakes that cause users to lose their funds are:
Lack of understanding of how crypto works
Forgetting passwords/ Mnemonic codes
Sending funds to dead addresses
Losing their cold wallet
Due to the very nature of how cryptocurrencies work, the crypto industry is the most targeted industry when it comes to phishing and hacking attempts. Therefore, it's essential that when using your wallet that you only access reputable websites or put in the research to ensure you're accessing a legit version of the website.
In addition to phishing and hack attempts, the cryptocurrency world is filled with scammers. This could be somebody promising trade and running away with your money or an entire crypto platform that ends up "exit scamming" with all user's funds.
Cryptocurrency is known for its unpredictable markets. Some cryptocurrencies that seemed reputable have fallen to less than 0.1% of their value within a few days. Although this is not specific to crypto wallets, holding your funds in a crypto wallet usually makes it more difficult and adds time to get to the point where you can exchange the cryptocurrency for a fiat currency.
Crypto wallets give the user all the control. This means they can use the wallet as they please.
Casinos: Users can use their wallets to deposit funds to different crypto-based casinos. Some wallets, like MetaMask, are imported into the casino UI to make things easier for the user.
Payments: The primary reason for the creation of crypto was to make decentralized payments easier. Using a crypto wallet, you can transfer crypto to anybody worldwide, and the funds should appear within a matter of minutes.
Investments: In the last few years, crypto has become one of the greatest investments. Using a crypto wallet, you have complete control over your holdings and can store them without trusting any third party to control them.
Anonymity: Anonymity is more critical than ever in a world that loves to control people and collect every bit of data as possible. Although there is more to it than just holding a crypto wallet, these are key aspects to ensure your funds and what you do with them remain 100% anonymous.
When it comes to storing small amounts, using a free hot wallet may suffice. However, for enhanced security and peace of mind, it is highly recommended to invest a few hundred dollars in a hardware wallet and consider a steel or stone paper device to store your seed phrases.
When purchasing a hardware wallet, it is crucial to buy directly from the manufacturer to minimize potential risks. By avoiding intermediaries, you reduce the chances of compromising your sensitive information or getting a compromised device. The 2020 Ledger data breach that leaked 270,000 phone numbers & physical addresses, and 1 million email addresses is proof of the need to take proactive security measures.
To further safeguard your privacy, consider having the hardware wallet shipped to a P.O. Box or an alternate address instead of your home. This additional step can provide an extra layer of protection against potential privacy breaches. By being proactive and mindful of these security measures, you can ensure the safety of your cryptocurrency assets.
There are hundreds of wallets to choose from, and many more are being created each day. This means there are a plethora of options. Therefore, you should take your time to research the wallets and what they have to offer. Once you've found one that suits you, test it out with something small, and take it from there.