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Whether you’re planning to buy cryptocurrency in India or simply holding crypto coins for future use, a secure cryptocurrency wallet is a must-have. A digital wallet is a software application that saves and stores public and private keys plus interacts with multiple blockchains. It facilitates users to send and receive digital currency plus monitor their balance. So, you need to know how to choose a secure cryptocurrency wallet.
In this industry, crypto wallets are an essential part of owning and investing in crypto coins, regardless of their type or where you buy them from. Even if you’re an Indian citizen and you buy cryptocurrency in India, you will still need to store them securely. But since there are way too many options, choosing the right crypto wallet can be a burden if you’re new in the crypto world. This article will guide you toward learning all there is to know about choosing a secure crypto wallet.
How Does A Cryptocurrency Wallet Work?
The first step towards selecting a secure crypto wallet is knowing how the wallet works! When one sends you bitcoins or other digital currencies, they are signing off ownership of the digital coins to your wallet’s address.
The private key in your crypto wallet must match the public address assigned to the currency to use those coins and unlock those funds. If the private and public keys match, the balance in your crypto wallet will increase, and the sender’s balance will decrease accordingly. There is no physical exchange of real coins.
What Are The Different Types Of Cryptocurrency wallets?
Next, it is crucial to know the several types of wallets that provide secure ways to store and access your cryptocurrency. It will help you understand which type of wallet will be best suited and provide you with maximum security. For instance, say you buy cryptocurrency in India, each cryptocurrency is in some way different from another and will have its own features, and one must know the best way to secure it.
- Desktop: Crypto wallets are downloaded and installed on a laptop or PC. They will only be accessible from the single computer in which you will download them. These wallets offer one of the highest levels of security. However, if your computer gets hacked or gets a virus, there is a possibility that you might lose all your crypto funds. Electrum and Exodus are reliable desktop wallets.
- Online: These wallets are accessible from any computing device in any location and run on the cloud. While they are easier to access, online crypto wallets store your private keys online and are managed by a third party, making them more vulnerable to hacking attacks and theft. Two good examples are Coinbase wallet and Blockchain wallet.
- Mobile: These run on an application on your phone and are useful because you can use them anywhere, including retail stores. Mobile wallets are usually smaller and simpler than desktop wallets due to the limited space available on the device. Copay is the most widely used mobile wallet.
- Hardware: These wallets store a user’s private keys on a hardware device like a USB. Although these wallets make transactions online, however, they are stored offline, which delivers enhanced security. Hardware wallets make transactions easier while also keeping your digital money offline and away from danger. Ledger Nano S is a reliable hardware wallet.
- Paper: Paper wallets are easy to use and give a very high level of security. The term ‘paper wallet’ could refer to both a physical copy or printout of your public or private keys, plus to software that securely generates a pair of keys that are then printed. Using a paper wallet is relatively straightforward.
How To Ensure Maximum Security Of Your Crypto Wallet?
The most important step is to know how you can increase the security of your digital wallet. Two crucial questions if you buy cryptocurrency in India are, one, where you can buy cryptocurrency safely in India, and two, how can you secure your crypto coins? Crypto wallets are secure to varying degrees.
The security level depends on the kind of wallet you use and the service provider. A web server is a riskier environment to keep your crypto coins as compared to offline. Although online wallets have proven the most unsafe and prone to hacking attacks, you need to implement and follow careful security precautions when using any crypto wallet.
- Backup your wallet: You should store only small volumes of crypto coins for everyday use online or on your computer/mobile, keep the vast majority of your crypto funds in a high-security environment. Cold or offline storage options for backup, such as a paper wallet or a USB, will protect you against computer failures plus allow you to recover your digital wallet, should it get lost or stolen. It will, however, not protect you against eager hackers.
- Update software: Keep your software applications up to date so that you can have the latest security improvements available. You should regularly update both your crypto wallet software and also the software on your computer/mobile.
- Add extra security layers: More the layers of security, the better. Setting long plus complex passwords and ensuring any withdrawal of crypto funds requires a password is a good start. Use wallets having a good reputation and implement extra security layers like two-factor authentication. You might also want to consider a crypto wallet that offers multi-signature transactions like Armory or Copay.
Parting Thoughts
Selecting a secure crypto wallet is not a simple task, and you should not treat it lightly. It will allow you to store your crypto coins safely. Research well and keep the search going, as you may not find your perfect crypto wallet on the first try.
Suppose you are new to the crypto world and finding it difficult to navigate your way around the industry. In that case, we highly recommend beginning your crypto journey with WazirX, a top cryptocurrency exchange platform.
If you have questions like where you can buy cryptocurrency, where you could sell it or exchange it, then we’ve got your back. Give a read to the WazirX blogs to better understand the crypto world before you get started!
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Frequently Asked Questions
What Is Crypto?
Crypto or a cryptocurrency is a digital currency protected by cryptography, making counterfeiting and double-spending nearly impossible. Blockchain technology is used to produce cryptocurrencies (a distributed ledger enforced by a distributed network of computers). Cryptocurrencies are distinct in that a government does not issue them. The word "cryptocurrency" refers to the encryption methods employed to keep digital currencies and the network secure.
Are Cryptocurrencies Legal In India?
In India, cryptocurrency is legal, and anyone can buy, sell, and trade it. Because India lacks a regulatory system to regulate its operations, it is presently uncontrolled. According to the Ministry of Corporate Affairs, companies must now document their crypto trading/investments inside the financial year.
How To Invest In Cryptocurrency Stocks?
Cryptocurrency can be purchased in two ways: through mining or exchanges. The process of confirming and adding transactions to the blockchain public ledger is known as cryptocurrency mining. Cryptocurrency exchanges are another option. Exchanges make money by charging transaction fees, but there are alternative platforms where you may communicate directly with other cryptocurrency traders.
How Cryptocurrency Works?
Cryptocurrencies use cryptography technology to keep transactions and their units (tokens) secure. Cryptocurrency works via a technology called the blockchain. A blockchain is a decentralized technology that handles and records transactions across numerous computers. The security of this technology is part of its value.
Is Bitcoin And Cryptocurrency The Same Thing?
Bitcoin is a cryptocurrency that was designed to facilitate cross-border transactions, eliminate government control over transactions, and streamline the entire process without third-party intermediaries. The absence of intermediaries has resulted in a significant reduction in transaction costs. Satoshi Nakamoto, the creator of Bitcoin, created the first cryptocurrency in 2008. It began as open-source software for money transfers. Since then, plenty of cryptocurrencies have emerged, with some focusing on specific fields.
Is Cryptocurrency Safe To Invest In?
Cryptocurrency investments are subject to market risks, but if sufficient security measures are not taken, trading accounts can be maliciously accessed. Investments come with risks and uncertainties, and we cannot claim that any digital currency investment is risk-free. Buying and selling cryptocurrencies can be risky even if the trader is knowledgeable about the market and treats their coins carefully.
Who Invented Cryptocurrency?
Satoshi Nakamoto invented cryptocurrencies and the technology that makes them function in 2009. The presumed pseudonymous individual or persons who invented Bitcoin used this identity. In addition, Nakamoto created the first blockchain database. Even though many people have claimed to be Satoshi Nakamoto, the person's identity remains unknown.
Is Ethereum Safe To Invest?
The Bitcoin market is unquestionably more volatile than the stock market. This may not be the market for you if you are incredibly risk-averse. Ethereum, on the other hand, may be a terrific investment for you if you're a diamond-handed investor who won't lose sight of short-term losses. Ethereum is a relatively safe investment as it is also based on blockchain.
Is Cryptocurrency Banned In India?
No, cryptocurrency is not banned in India. India has seen its ups and downs in the crypto sector concerning its legal status. The Reserve Bank of India (RBI) issued a circular in April 2018 advising all organizations under its jurisdiction not to trade in virtual currencies or provide services to assist anyone in dealing with or settling them. A government committee proposed outlawing all private cryptocurrencies in mid-2019, with up to ten years in prison and severe penalties for anyone dealing in digital currency. The Supreme Court overruled the RBI's circular in March 2020, allowing banks to undertake cryptocurrency transactions from dealers and exchanges.
What Is Virtual Currency?
Virtual currency is a type of uncontrolled digital currency that can only be used online. It is exclusively stored and transacted using designated software, mobile or computer applications, or unique digital wallets, and all transactions are conducted through secure, dedicated networks. Because digital currency is just currency issued by a bank in digital form, virtual currency is not the same as a digital currency. Virtual currency, unlike ordinary money, is based on a trust structure and cannot be issued by a central bank or other banking regulatory organization.
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
