Storage issue is a fundamental issue in the cryptocurrency ecosystem. If you can easily find tutorials on the internet that explain how to buy cryptocurrency, there is a bit of talk about hoarding. So how do you store cryptocurrencies?
Throughout this article, we will tell you about different solutions that allow you to store your cryptocurrencies in a more or less secure way. We will see in conclusion, which option is most suitable for your needs.
How does a digital wallet work?
The digital wallet is translated into English by e-wallet, which is generally abbreviated wallet. This is the last term we will be using throughout this article. So how does a wallet work and how do you use it to store cryptocurrencies?
We can compare a wallet with a bank account to make it easier to understand the whole. Once you have a wallet, you will receive two tokens: the public key (which can be likened to a RIB/IBAN) and the private key (which will be compared to a password to access the bank account).
Like RIB and IBAN, only the public key of the wallet is used to identify the user. So this key can be shared and should also be made available to other users who want to make a transaction on your wallet.
On the contrary, the private key, as its name suggests, is private. It should in no case be sent to other people as it gives access to the content of the digital wallet. If your wallet’s private key ends up in the wrong hands, the cryptocurrency could be gone forever. Even if it is stored on a secure device.
So this is how a cryptocurrency wallet works. In the rest of this article, we will see the different types of wallet that cryptocurrency can be stored on, including Bitcoin, Ether, etc.
The different types of wallet where cryptocurrency is stored
As we have indicated, there are different types of wallets. The process generally remains the same, but the difference often occurs in the storage system.
There are two distinct categories: “cold” wallet (offline wallet) and “hot” wallet (online wallet).
An offline wallet or cold wallet is a method of storing cryptocurrencies outside the network. Since there is no way to access it remotely, it is the most secure class of wallet. Due to its security, the cold wallet is preferred by the most cautious and those who hold a relatively large number of cryptocurrencies.
There are two types of offline wallet: hardware wallet and paper wallet. These two options allow you to store cryptocurrencies offline. Now as you will see below, the transaction method is slightly different.
A hardware wallet is a “physical” storage medium for cryptocurrency. In other words, it is a complete electronic device that allows bitcoins, ether and other cryptocurrencies to be stored independently of the Internet. Hardware wallets are very popular among users who have a relatively large reserve of cryptocurrencies.
Currently, the reference in terms of hardware wallets is French startup Ledger. After successive fundraising operations, the Parisian company has established itself in the international market. It must be said that Nano S, the cryptocurrency storage medium that the team proposed, was somewhat revolutionary at the time.
But while the Ledger Nano S has won many investors and crypto users, the Ledger Nano X only cemented the startup’s already dominant position in the cryptocurrency storage wallet market. Indeed, the Ledger Nano X meets all the requirements in terms of security and practicality.
Wirelessly, the Ledger Nano X is a storage device with a Bluetooth chip. Thanks to this technology, users can control the storage of their cryptocurrency from a mobile app and that’s always without having to access the Internet. Despite the presence of Bluetooth, this device remains in the offline wallet category.
The second option in terms of cold wallet is the paper wallet, which can simply be translated as a paper wallet. It is a relatively safe option for storing encryption since there is no interaction with any other electronic device except through the camera.
On the paper wallet, the wallet’s public key is printed as well as the QR code. By scanning it from the smartphone camera, there will be an interaction. The procedure caused by scanning this QR code is only to transfer cryptocurrencies to this wallet, making it more secure.
On the other hand, to take out cryptocurrencies, the process is a bit more complicated. You will have to use another type of wallet (online or desktop) where you will provide the public and private keys to access the content afterwards.
Anyway, in addition to its undeniable security, a paper wallet has the advantage of being completely free. The only downside is that if a piece of paper is lost, it takes all the stored cryptocurrency with it. So it is necessary to make a copy.
Now let’s move on to the online wallet or the hot wallet. As you understand, this is a digital wallet for the operation of which requires access to the Internet. Storing digital currencies online is the most common.
It is much easier to use and you can manage your cryptocurrency anytime and anywhere as long as you have an internet connection.
The only criticism that can be leveled with this type of wallet is the fact that it is connected to the internet and therefore can be accessed remotely. That is why it is advisable to take the decision with great care.
To save you hours of research, we advise you to choose ZenGo, an app that has already proven itself in the field of crypto storage. This is an online wallet in which only the user in question has the private key. Thus, only this user can access the contents of his wallet.
ZenGo focuses on the safety of its users. In fact, the application offers an innovative system that is associated with the private keys of your cryptocurrency. Instead of the traditional private key, ZenGo splits it into two parts: one that is kept in the company’s servers, and the other on your smartphone. Thus, the user is the only one who has access to their funds, even ZenGo does not have this possibility.
ZenGo also has a particularly powerful facial recognition system. This way, only the user’s face can open the app.
To use ZenGo, you have to browse the mobile app (Android or iOS). This is the only way to access the service. To download the app, you can get started by clicking here.
A desktop wallet is the “desktop” version of a digital wallet for storing cryptocurrencies.
If we don’t categorize a desktop wallet either in the online category or in the offline category, it’s because it’s a bit of a mix of these two storage solutions. So it can be considered in a separate category.
A desktop wallet is a program that allows you to store your cryptocurrencies directly on your computer. However, there are two very distinct types of this category: full wallet (full wallet) and lightweight wallet (light wallet).
A lightweight wallet or light wallet (or even a light client) is a desktop wallet that does not download the blockchain and performs a simplified transaction verification process.
Like Exodus and Electrum, these storage solutions are particularly light and operate similar to the ZenGo app, but on a PC.
Like Bitcoin Core, there is also an entire wallet or an entire wallet that operates completely independently of the network. The software that will act as a computer wallet will download the entire blockchain of the respective cryptocurrency to store on your computer’s hard drive.
By installing a full wallet on a computer, you will become a full node and contribute to the security of the network. The owner of this computer will become a minor and will be paid for participating in the network security. However, this solution is not suitable for everyone. Beginners, or people who don’t want to spend a lot of time managing their cryptocurrency, can find an alternative with easier-to-use wallets like the ones offered by ZenGo.
What storage solution should you choose? Our advice
What we can learn from this article is that when it comes to storing cryptocurrencies, there is a solution that adapts to every need.
If you are looking for a crème de la crème in terms of security, it is best to switch to a cold wallet (offline wallet). The latter is offline and therefore impossible to hack remotely. In this sense, you can choose between Nano S or Nano X to start the Ledger which manifests itself in the form of a USB key.
Get ledger wallet
Note that in this particular case, if you can’t access your offline wallet, you won’t be able to access all the cryptocurrencies it contains forever. This is a risk that must be taken into account whether for a hardware wallet or a paper wallet. Paper wallet becomes more fragile as it can be lost or damaged very easily.
The obvious alternative to avoid losing your cryptocurrency storage broker is to use a hot wallet (online wallet). This is one of the main arguments for this type of storage as well as its ease of use. This explains its popularity. As such, you can choose ZenGo which is more secure than a hot wallet like Metamask, for example.
For a lightweight wallet, this solution is not very interesting since its principle of operation is similar to an online wallet, but on a computer. Using the ZenGo mobile app is simpler and more flexible.
Storing Cryptocurrencies in ZenGo
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