Storing Crypto: Digital vs Hardware Wallets
When it comes to storing crypto, there are two main options: digital wallets and hardware wallets. While both provide secure storage for your cryptocurrency, each type of wallet has its advantages and disadvantages. Ready to discover them? Let’s go!
Holdings of Cryptocurrencies
Before seeing the difference between the two types of wallet, it is important to make a quick review of how a wallet works. A wallet is a combination of a pair of 2 keys:
- The public key: truly public and can be shared widely;
- The private key: truly private and has to be known only by the owner.
So, what is the simple way for someone who just entered the crypto field to hold its cryptocurrencies? To leave them on an exchange wallet.
Although it may be the easiest route, you don’t really “own” your crypto.
Indeed, in this case, the private and public key are entirely owned by the exchange. The exchange then provides you with your public key (your address) and keeps your private key to validate transactions (buying, selling, withdrawing, staking, etc.).
Since you don’t have a private key to access it, this way leaves you quite vulnerable to hacking or to collapse of the exchange, like it was the case for FTX for example.
The best way to safeguard your crypto is self custody.
Hardware and Digital Wallets
Both digital and hardware wallets allow users to store their cryptocurrencies on computers or smartphones.
Digital wallets are free and easy to use, making them popular among beginners. They’re also convenient because you can access them from anywhere with an internet connection. Digital wallets let you hold on to those private keys yourself instead of relying on a third party — you’ll be responsible for keeping your key safe somewhere on your computer or smartphone. One of the most famous digital wallet is MetaMask.
However, they are vulnerable to hacks and other cyberattacks, making them less secure than hardware wallets. Because the keys are held online, they can be targeted by virus, phishing, or hacking attacks.
Hardware wallets, on the other hand, are much more secure. These wallets keep your private keys offline and inaccessible to digital threats. As your private key is never communicated outside the device, you can even use your wallet on a potentially infected machine, without any risk (where a digital wallet could be directly attacked).
On the top of that, each transaction requires manual confirmation by pressing the buttons on the device. This way, even if a malicious person managed to launch a program to steal your funds, it would never be executed, as the person does not have physical access to the device.
We’ve developed Tozex to ensure the security of all the operations realized on the platform as much as possible.
Tozex supports digital wallet but also hardware wallets, such as Ledger, as well as multisig wallets, which require two or more private keys to sign and send a transaction. Thus, our platform allows you to buy, sell, and exchange your assets with maximum security and total control.
In the recent FTX scandal, users lost millions of dollars due to the platform’s mismanagement. This highlights how important it is to store your cryptocurrencies in secure wallets that are not vulnerable to hacks, security threats, and which you have full control over. If you’re looking for the most secure way to store your crypto, hardware wallets are probably the best choice.
With Tozex.io, you can use them easily, and even reach a new level of security thanks to our multisignature wallet functionality, which can be set up in a few minutes! Thereafter, you will be able to enjoy maximum security for your cryptocurrencies while using them on our platform. Learn more at Tozex.io today!