Concept of Wallet in Bitcoin & Cryptocurrencies:
A wallet usually refers to a thing traditionally used to store/keep money, cash, or other valuables.
Moving out somewhere carrying or keeping our money in the worldly wallet is considered safer than putting all stuff in pockets sounds insecure.
We usually prefer to put cash in worldly wallets instead of putting them in our pockets makes us more comfortable, especially when we are moving out somewhere.
Similarly, different wallets are used to safely store the cryptocurrencies by its users to ensure their valuable assets’ maximum security.
These wallets are not like worldly wallets; instead, they are computer-generated programs run on our computers to safely store the Bitcoin assets and other valuables cryptocurrencies for a long and short period of time.
Thus the basic concept and use of either worldly wallet or cryptocurrency wallet are almost the same.
The primary functions and purpose of both wallets are similar.
When talking about digital currencies, there are usually two different types of wallets used, Hot wallets/online wallets, the other category is known as hardware wallets.
Let’s explore the basic idea and working mechanism of both online and hardware wallets.
Before stepping forward into the discussion of wallet categories, one must understand and clear the concept of Private and public keys.
Without a proper understanding of these keys, online and hardware wallets’ theory gets a bit perplexed.
What are the private and public keys?
To better understand private and public keys, let’s go back for a while and remember the old time when you received the welcoming documents at your postal address sent from your bank, where you recently opened the first bank account of your life.
Excitedly opening a set of important documents, welcome and explains the necessary credentials that belong to your bank account, telling your bank account number, which is used to receive funds/money either sent by someone or you can also be called the public key, which is available publicly and primarily used to receive the funds.
Similarly, you are also provided with a private and confidential key, known as a password, which you are advised to keep confidential all time as not to share with anyone.
And much more critical instruction to keep that password safe and secure because this confidential password is used whenever you wants to access your funds in order to withdraw or sending to somewhere.
Similarly the private keys in cryptocurrency act the same function, providing an open and hassle free access to the bitcoins or cryptocurrency assets.
What is Hot Wallet in cryptocurrencies?
Let’s explore the mystery of hot/online wallets in the universe of cryptocurrencies. Hot wallets are a computer generated program along with both public and private keys, run on a computer, laptop, or cell phone to store the Bitcoins and other cryptocurrencies according to its supported features.
Hot wallets are usually offered a free of cost online wallets by different digital currency exchanges and service providers.
Hot wallets are prone to the security as recent reports reveal a soft target to cryptocurrency assets.
While storing Bitcoins in a hot wallet, ones required to save hi/her private keys online thus poses a serious threat to the security of Bitcoin assets.
Digital thieves have proved on various occasions, the security of hot wallet is easy to breach as compare to the cold wallet, because in the advanced cyber world with the help of some programming tools the ongoing activities of any specific IP address can be watched.
Hence putting our digital assets into a completely insecure and unsafe mode.
The use of hot/online wallets is quite popular among the traders of digital currencies as they always need them multiple times according to their trading needs because hot/online wallets are an easy and quick access to crypto assets.
There fore always advised not to store much amount of yours digital assets not even for a long time using hot wallets.
Cold Wallets are known as Offline wallets
Cold wallets or offline wallets tend to store your Bitcoin assets and other crypto currencies in an offline mode, therefore usually considered one of the best ways of storing your Bitcoin assets especially for longer time.
The state of the art offline storage features of these cold wallets makes it almost foolproof and impossible to be breached from security point of view.
That means your crypto funds are completely safe if you have stored them in a cold wallet as cold wallet offers to store your private keys offline away from the illicit approach of cyber players and advanced digital thieves.
Cold wallets are further categorized into two different wallets.
- Paper wallet
- Hardware wallet
Paper wallet :
Paper wallet is a basic concept of cold storage, this method of cold storage allows you to generate and store the private and confidential keys in an offline mode without the fear of being hacked.
Private keys can be stored on a specific piece of paper usually provided by the service provider or any of your choice but the safety of this paper becomes your sole responsibility as paper itself is sensitive to its nature and can be damaged or tampered easily.
It is a cheap way to store the Bitcoins as it only requires a printer and a piece of paper.
The selection of Paper wallet method is no doubt one of the highly secured cold storage but gets more perfect when you take the responsibility of paper got your private and recovery seed phrase because if your private keys and “recovery phrase” are lost, no chance to get your funds back.
Securing your Bitcoin assets using paper wallet becomes more effective and foolproof when you use the bank safety deposit box service, but this service will cost you fortune once more.
Different banks offers a safe deposit box to keep the valuables and important documents along with their insurance scheme keeping invite the importance of your kept items.
Hardware wallets are the Best Cold storage
Another best and widely used method for Bitcoin safe storage is known hardware wallets.
Hardware wallets are usually a small size of electronic gadgets like USB drive usually generate and store the private keys in an offline mode.
As security concerns and threats are rising the use of Hardware wallets getting popular and frequent.
Different types of hardware wallets are available in the market and online supporting different features and crypto currencies.
The normal price of a hardware wallet starts from $60 and hits $200 based on varying features and facilities.
Now we are going to explore the salient features of one of the best and widely used Ledger wallet quite famous of its highly secured storage features and durability.
Ledger Nano S the best cost effective Hardware wallet (Ledger Nano S Review)
Widely known, Ledger wallet, a hardware wallet was initially launched in 2014 with tireless efforts of eight highly experts with complementary backgrounds in embedded security.
Entrepreneurship and cryptocurrencies, together around the basic idea of creating some highly secured solutions for blockchain technology and application.
They folks now have more than130 employees in Paris, Vierzon and San Francisco.
Ledger Nano S is considered one of the most popular cryptocurrency hardware wallets (more than 1.4 Million units sold).
The Ledger Nano S is a highly secured, most reliable and an affordable choice to securely store cryptocurrency assets for both short and long term.
Because of its security features, good looking design, mobility, cost effectiveness and supported coins Ledger Nano S has proved to be one of the best selling hardware wallets.
Ledger Nano S a state of the art “Unique technology”
Ledger Nana S is widely known because of its state of the art and unique block chained supported technology. They folks developed a distinctive operating system (OS) called BOLOS.
Which we integrate either to a secure chip for the Ledger wallet line,or to a Hardware Security Module (HSM) for various enterprise solutions.
One of the most noteworthy point, Ledger has been the only market player in the Block chain industry as well as in the world of cryptos who provides this technology.
This detailed review of Ledger Nano S will certainly help you figure out, that Ledger Nano S is the right hardware wallet for your cold storage of digital assets.
This is the reason, the Ledger Nano S is not obsolete yet and as our surveys reveal and in analysts opinion, Ledger Nano S is still holding its strong share in the secure contribution of crypto assets.
It is still a wise and excellent choice for casual cryptocurrency traders who do not wish to trade a lot of altcoins, and particularly those seek to store their cryptocurrencies in multiple devices for fool proof security.
The Ledger Nano S is considered a safe haven within the cryptos communities.
Let’s discuss the key features of Ledger Nano S Version
Following are the Key features:
- Ledger Nano S facilitates Staking and earning.
- It also offers to its customers the option of Swapping.
- Lending opportunity is also there for the users of Ledger Nano S.
Some extra features of Ledger Nano s
- Providing multi Currency Support features.
- Hardware Design is durable with a display screen size of 128×64.
Salient features of the Ledger Nano S
- The vibrant technology used in Ledger Nano S, always ensures Foolproof security and high level of protection to rule out the concept of digital theft and robbery.
- One of the not worthy aspects in the time of high inflationary societies where cost does matter, its price is pretty much suitable not just for the beginners even for the mature traders too.
- Availing the unique staking features one can easy and securely earn cryptocurrency whilst keeping it
Ledger Live facilitates the customers for staking Tezos ($XTZ), Tron ($TRX), Cosmos ($ATOM) and Algorand ($ALGO).
Users can swiftly check out their cryptocurrency assets and in return they are paid with interest as a reward.
Another remarkable feature of Ledger Nano S that expands it into more than just a secure zone to safely keep the digital assets, it can even potentially help you produce your crypto assets.
The stacking process of your digital currencies can be figured out in three easy and simple steps.
1) You can freeze your digital assets through logging onto Ledger Live, choosing the relevant account for the asset you are looking to stake and click the button “earn rewards”. A popup window will immediately appear.
Then you will be authorized to choose the required amount in your wallet you want to freeze.
2) Then vote for your validator (s) who will be making the blocks on your network and the cryptocurrency received by making these blocks would be redistributed to voters.
3) There is another awesome facility to claim the rewards by clicking Claim in your relevant account.
It also facilitates its customers to claim their rewards after 24 hours.
Ledger Nano has released another advanced Swap Feature which permits the users to exchange their digital currencies through their partner Changelly.
How it functions,is you send your crypto money from your device to Changelly, who will send you back the swapped cryptocurrencies.
If you want to get this feature, you will probably need Ledger device, Ledger Live, the app for the cryptocurrency you want to swap and receive, and then finally the exchange app.
Ledger is working efficiently with Compound ($COMP) to authorize its users to lend DAI, USDT and USDC through Compound’s decentralised finance (DeFi) protocol.
The only objective of doing this,is that the lender may earn an Annual Percentage Rate.
There are many other benefits when using Ledger to lend:
Control: we have complete control and proof that the crypto we lend and generate interest belongs to us.
The only reason, because this feature is processed through Compound, and when we lend on the platform we get “cTokens” in return.
cTokens usually represent proof of our ownership of the cryptocurrencies lent and the interest generated.
These cTokens are stored by us until we want to lend our assets and interest back, and in which case all we need to do is just to send the cTokens back to the smart contract.
Security: cTokens are usually stored on your ledger hardware wallets.
Convenience: Another appreciated and interesting feature,” Compounds” lending is available directly through Ledger Live.
The facility to lend the crypto while using compound and Ledger live is simply done in 3 steps.
- On Ledger Live’s Manager, simply install the application for the cryptocurrency you want to lend and create an account.
- Then enable your account to permit Compound’s smart contract to interact with your account.
- Subsequently, choose the amount of digital currencies you wish to lend and issue a transaction to Compound, verify and approve the transaction on your device.
Why use a Hardware Wallet to store the Bitcoins?
One of the frequently asked questions when it comes to the security of digital currencies, why should we just use the Ledger Nano S, instead of going for other hardware devices for the storage of our cryptocurrency assets?.
Yes one can go for the online wallets as its ones choice, it’s totally up to you, we have explained well the vulnerabilities to the online wallets or the hot wallets.
Even better the choice of Paper wallet would quite reasonable and wise as it tends to secure your digital assets in cold storage, but some folks claim.
The paper is quite sensitive to its nature and can be lost, tampered and damaged, then the selection of Ledger Nano S, for the secure and fool proof storage of your digital assets would be no doubt a wise and mature decision.
It is the only hardware wallet provide you the best security against any possible hacking threat or online theft of your digital assets.
It state of the art offline features, where your private keys are generated and then stored within your Nano s device, mean no way of moving these credentials out from you storage device.
Generating and storing the keys within the device with the help of displaying features and added buttons, helps you to type your all secret credential within the device.
More over it stores the recovery phrase within the device that is usually used as a last tool of recovering the lost digital currencies.
The only thing you need to do is to look after the device by placing it at some safest place where you think, only you can have the access.
Your safe deposit box at home or even in any locked cupboard.
Some most recent reports show, how digital players hacked one of the widely known crypto currency exchange and took away the multi millions dollars worth of digital currencies within no time.
Most worth mentioning,the unfortunate incident of MTGOX, still people are protesting to get the claims of their funds.
Experts suggestions and a key to the kingdom
History always repeats it self, and we can make future decisions on the basis of past incidents, yes it is true but we totally agree with it.
The multi millions online robberies of digital currencies indicate to invent new and novice ways to prevent these threats for the better and safe future.
The safe and fool proof storage of our digital currencies as it has been recently declared the currency of future, ones must take mature decision to keep these assets in to some safe heavens.
Hot wallet storage and the paper wallet storage has been well explained.
The possible online threats to the hot wallets have also been explained and we did try our best to explain you the best storage methodologies in different modes.
So a key to the kingdom is to always prioritize the cold storage hardwares for the better and safe storage of your digital currencies a it provides high levels of security protocols and endless peace of mind.
Your valuable feedback is always important :
If you guys have ever gone through the experience of holding your crypto currency assets through cold storage methods and you have also got the wonderful experience of using Ledger Nano S.
We would love to have your valuable feedback on our comments section .