An estimated $9 million worth of cryptocurrency is lost every day to hacking, phishing, scams, fraud, and theft. To avoid becoming a part of this statistic, you need to be extremely careful about where and how you store the cryptocurrencies you’re investing in.
Don’t be fooled by arguments over cryptocurrency storage; some folks out there feel it’s just a metaphor because Bitcoin (BTC) and other cryptos aren’t physical.
Storage matters. Just like you would store cash, your crypto needs its own wallet for safekeeping.
The absolute gold-standard best security for your crypto is a cold storage wallet. These keep your digital assets offline in a piece of real, “physical” hardware that can only be accessed via a unique private key of your own devising.
The drawback is crypto that’s in cold storage can’t be used to make transactions online, because the wallet is not connected to the internet. You have to physically have the wallet with you in order to do anything with your crypto.
For long-term investment purposes, that’s perfect, but if you’d like to use your crypto for buying or selling, or “cashing out” to dollars, you’ll need a hot wallet for whatever portion of your crypto you’re using.
Hot wallets are connected to the internet through an app or browser extension. They’re easier to use, cheaper, and let you trade crypto from pretty much any internet-capable device.
Hot wallets come in two “flavors” – non-custodial and custodial.
Non-custodial wallets still connect to DEX’s (decentralized exchanges), where you can buy, sell, or stake your crypto, but you are still in charge of your tokens. With custodial wallets, the exchange is in charge of your crypto, similar to how a managed portfolio works in traditional equities.
Today, we’re looking at three of the most popular non-custodial wallets on the market and putting them to the test, to help you decide which one is the best choice for your crypto needs.
Wallet No. 1: Crypto.com
Crypto.com is arguably one of the most recognizable cryptocurrency companies out there right now. The exchange has spent big money on marketing efforts, particularly with sports fans, who will remember its big Super Bowl LVI ad debut featuring a young LeBron James. That came just after Crypto.com secured 20-year naming rights to the former STAPLES Center in downtown Los Angeles where James plays for the Lakers.
-Offers a wide range of features and benefits, including staking, borrowing, lending, and crypto debit cards.
-Security is first-class, with a $750 million insurance fund.
-The user interface is clean and friendly for anyone to use.
-High withdrawal fees.
-Less-than-ideal customer service.
-Crypto assets are limited geographically, and this can hurt crypto options.
The brand suffered a major hack attack recently, and there was a loss of user funds in early 2022. However, the company has claimed that all customers were fully reimbursed for the incident.
Wallet No. 2: Coinbase
Most crypto investors use Coinbase in some capacity: It’s based in and banked in the United States, which is a huge plus, and source of great peace of mind. Coinbase offers a convenient, secure interface that’s used by over 89 million people. Coinbase Wallet is its native cryptocurrency storage wallet and dApp (decentralized application) browser, available for both iOS and Android devices.
What makes Coinbase Wallet extraordinary is the clean, uncomplicated interface, in addition to the fact that it enables the potential to send or receive crypto money to simple usernames referred to as public keys.
-The user-friendly and accessibility that Coinbase Wallet offers is a great alternative to complicated web wallets, helping new crypto users to get readily acquainted with the crypto world.
-Coinbase Wallet provides a free wallet service and charges no fee during or after the registration process. (However, charges are applicable for exchanges.)
-Transaction fees are average.
-Coinbase Wallet ensures users’ digital assets are well-protected.
-Supports most mainstream cryptocurrencies.
-While the Coinbase Wallet supports most mainstream cryptos, you’re still limited in what you can store. This isn’t necessarily a setback for beginners, as the popular currencies are more than enough to start out with. But for users that are interested in investing in the not-so-popular cryptos, this may become an issue.
-Coinbase Wallet requires an internet connection at all times.
-Another drawback that users often encounter is that Coinbase has a much slower support system in comparison to other cryptocurrency platforms, so when a user has issues with their Coinbase Wallet, it may take a while to get professional assistance.
Wallet No. 3: MetaMask
MetaMask is a browser-based crypto wallet that is installed as an extension, and having one will no doubt allow you to take advantage of more moneymaking opportunities in crypto. You might need it for things like storing non-fungible tokens (NFTs), buying SingularityNET (AGIX), or staking Fetch.ai (FET), among other things.
-MetaMask is available in the App Store (for iOS users), Google Play (for Android users), and also in supported browsers, including Google Chrome, Firefox, Brave, and Edge. That makes it accessible to most people, no matter the device they’re on.
-The encrypted password required to log in to your wallet, the Secret Backup Seed phrase, is what makes MetaMask very safe to use.
-Another feature is that MetaMask doesn’t control your private key, making it very secure to keep your cryptos on.
-Finally, it is an open-source wallet, which makes it harder to hack, and there are always developers making the latest updates.
-While MetaMask does not have access to your information, the browser you’re using does. This is a vulnerability point for hacks, because it’s easier to hack an individual browser than it is to attack MetaMask itself.
-It can take a while to confirm transactions through MetaMask, which can result in higher fees as well. Slow transactions happen when the network is overcrowded at specific times and usually takes longer to send tokens.
-MetaMask recently made headlines for a hack that cost one investor $650,000. But it looks like the real breach was on the user side, rather than anything having to do with MetaMask itself. The key takeaway here is that you should never divulge your private keys to anyone – ever.
How to Protect Yourself Using Hot Wallets
If you’re going to use an Internet-connected hot wallet, you need to be conscious of some security practices.
The easiest way for someone to get your personal information is through social engineering, which is a common trick used by scammers. No coding or advanced hacking involved – they just trick you into giving them your information.
Their platform of choice is Discord, a social media ecosystem that’s home to a profoundly vibrant community of crypto users, investors, and developers. Which is, unfortunately, why it’s a favorite haunt of scammers. They take advantage of the anonymity to convince strangers to share personal information. Scammers will send you DMs with links in Discord all day long, appearing to be your new friend and helping you in every shape or form along your crypto journey.
Upon you clicking one of these links from your new “friend,” you can kiss your portfolio goodbye. It happens in fractions of a second. That’s why it’s so important to develop a strong sense of discernment, a “baloney detector.” Revert back to that childhood saying from mom: Don’t talk to strangers.
And for an added layer of security, the best course of action is to keep the minimum amount of crypto necessary for transacting business in your hot wallet, and get the rest into cold storage.
Now that you’re on your way to finding the best place to keep your crypto, you can start building a portfolio that’s going to make you money.