Can Your Crypto Wallet Be hacked?
Irrespective of the kind of crypto wallet you have chosen to use, it is paramount that you ensure that your choice wallet is not prone to hacks and has the capacity to safeguard your digital assets at all times.
TL;DR
- There are different types of wallets available for holding cryptocurrencies
- Depending on your preferred option, it is important that you keep your private keys safe and stored in a secured location
- Crypto wallets can be hacked that is why it is sometimes recommended to store assets on a cold wallet
Types of Crypto Wallet
Crypto wallets are broadly categorized into hot, cold, and paper wallets. Although in recent times, paper wallets are no longer in vogue, therefore, we will concentrate our effort on explaining hot and cold wallets.
Hot wallets are crypto wallets are can be accessed online. This type of wallet exists on both centralized and decentralized crypto exchanges and can even be accessed through mobile applications or as browser extensions. For those that are hosted on centralized exchanges, users need not worry about their private keys are the exchange holds them securely. However, users who prefer to use decentralized hot wallets will have to safely store their private keys.
Cold wallets exist offline and assets on this type of wallet have to be stored on special purpose devices (usually in the form of flash drives). With cold wallets, users hold little to no risk of a hack as their assets are not online. For instance, if a crypto exchange gets hacked, hot wallets on the exchange will be compromised, whereas, cold wallets will suffer no risk as the assets are not hosted on any exchange.
Private Keys are Private
Private keys play the role of locks and anyone who has access to them can easily get into a crypto wallet and access the funds held in them. For this reason, it is always advisable for crypto users to safely store their private keys in a place where no other individual can access them.
As much as hot wallets are easily susceptible to hacks, cold wallet holders must also be careful not to misplace their private keys are it might spell the loss of the assets contained in them. Both have their pros and cons, but one thing is paramount, all private keys must be kept private.
Which is Better?
There is no best option when it comes to crypto wallets, however, cold wallets tend to be safer and less prone to hacks than hot wallets. If you wish to invest in the long-term, you should definitely consider a hot wallet, but if you wish to constantly engage in asset flipping or trading, a hot wallet will be more convenient for you.
Conclusion
Crypto wallets are meant to be kept safe at all times and as a user, you are supposed to play your part by safeguarding your private keys. Hot wallet users, however, need to hope that their host does not get compromised. This is a reality they have to keep with at all times.
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