The types of cryptocurrency wallets can be divided into hardware wallets, software wallets, and managed wallets.
There are four key factors to consider when picking the right wallet: security, convenience, compatibility, and control.
You should do your research to rule out untrustworthy platforms before choosing a suitable wallet.
All cryptocurrency users, even newbies, should be aware of the different ways to store cryptocurrencies. Wallet types can be divided into hardware wallets, software wallets and managed wallets.
Which one is the best? Binance believes that there is no standard answer to this question. Wallets come in all shapes and sizes, and all have their strengths and weaknesses.
For example, many users value the convenience of a centralized exchange (CEX), while others may want offline solutions, also known as hardware wallets, that are less vulnerable to cyberattacks.
Go to Binance’s Official Website
Four Factors to Consider When Choosing a Cryptocurrency Wallet
When deciding how to store your cryptocurrency, it’s best to do your research first and choose according to your needs. To help you choose a wallet, Binance has listed four key factors that every user should consider:
- Safety
- Convenience
- Compatibility
- Controllability
1. Safety
When storing cryptocurrencies, security is the most fundamental and fundamental requirement. Just make sure to choose a wallet that will protect your keys and, more importantly, minimize the risk of your funds being stolen.
If you use a custodial wallet, be sure to do strict due diligence and verify that the company hosting the funds is reputable. If you choose a hardware wallet, your cryptocurrency is completely in your hands, so it is your own responsibility to keep it safe.
Again, please do your own research (DYOR). Whether the trading platform is trustworthy should be considered from the following aspects: whether the security team has rich experience, whether the reserve fund can be proved sufficient, whether the identity verification (KYC) process is strict, and whether the user fund protection record is reliable.
In addition, Binance recommends that you refer to Binance Academy’s comprehensive guide for more information on securing your cryptocurrencies.
2. Convenience
Some storage methods may not be ideal for day traders who need instant access to funds, or inexperienced users who are not familiar with how to hold their own private keys.
If convenience is what you value, a custodial wallet is ideal. Web2 users may be more familiar with this approach and are generally less likely to switch to non-custodial wallets.
As long as you remember your username and password, you can access your account at any time. If you have two-factor authentication (2FA), we strongly recommend that you turn this security setting on, just to make sure you don’t lose authenticated access.
3. Compatibility
There are so many cryptocurrencies on the market, check which coins your wallet is compatible with, and make sure it supports depositing and withdrawing the various coins you hold or are interested in.
4. Controllability
The wallet’s control over your funds is another key factor to consider when choosing a cryptocurrency wallet to use. Storage options like hardware or software wallets give you full control over your keys, while others like exchanges hold private keys on your behalf.
If you are used to managing your cryptocurrency funds yourself, you should choose a wallet where you keep your private keys. And if you value convenience and accessibility, you should use a trusted exchange.
Choose your wallet: hardware, software or custodial
1. Hardware wallet
Hardware wallets are considered by many in the cryptocurrency space to be the gold standard of security because of their guaranteed security. A hardware wallet is actually a physical device designed to store private keys, a string of data that is equivalent to a password to access funds. Unlike the other methods we mentioned, hardware wallets do not need to be connected to the internet, so they are not vulnerable to online attacks.
The catch is that hardware wallets and other non-custodial storage methods share a common drawback: if you lose access to your keys, your funds could be lost forever.
There is no password reset button and no way to call customer service if something goes wrong. You’ve probably heard of it too: forgetting your passcode, throwing away your hardware wallet by mistake, or giving your keys to crooks by mistake.
Therefore, remember to keep the key safe, preferably in a safe, and do not share it with anyone.
Go to Binance’s Official Website
2. Software wallet
As the name suggests, software wallets are digital, usually connected to the internet and operated on electronic devices. Common software wallets include desktop wallets, mobile wallets, and web wallets.
Exchange and browser-based wallets are web wallets; some are custodial (meaning a custodian keeps the keys for you), while others are non-custodial.
A desktop wallet is a program that you install on your computer and you have full control over your keys and funds, unlike web wallets.
Mobile wallets are similar to desktop wallets, but are used on mobile devices and allow users to manage funds through a smartphone app. One popular mobile wallet application is Trust Wallet, an open-source, decentralized mobile wallet that supports more than 3 million cryptocurrencies across approximately 60 blockchain networks. Trust Wallet also offers NFT storage, in-app staking, a built-in DeFi browser, and many other features.
While software wallets are convenient, secure and provide a good balance, you still have to be careful not to download harmful programs and viruses to your device.
Managed Wallet
Using a custodial wallet means that your private keys will be held and kept by a third party. Exchanges are commonly known as custodial wallets, which are essentially websites that allow you to trade cryptocurrencies.
For most users, trading platforms provide them with the easiest way to manage cryptocurrency funds. No need to memorize the private key. Also, the user interface is usually intuitive and easy to use, and they usually have a large customer support team that helps users with various issues.
Non-custodial wallets will essentially require you to “be your own bank”, that is, you are fully responsible for the security of your wallet and funds.
If you choose to store cryptocurrencies on an exchange, you should ensure that the platform complies with local regulations and preferably has some form of insurance safety net in place to protect users from the worst-case scenario.
Take Binance as an example. Binance has registered in 14 jurisdictions, obtained their regulatory licenses and approvals, and has the strongest compliance team in the industry. Binance holds all users’ assets in a 1:1 ratio, and anyone can verify this ratio using our recently developed Merkle Proof-of-Reserve (POR) system. In the event of an emergency, Binance has a $1 billion insurance fund, also known as the Security Asset Fund for Users (SAFU), dedicated to mitigating damage to users.
Go to Binance’s Official Website
Manage cryptocurrencies your way
When it comes to cryptocurrency storage, there is no one-size-fits-all answer as to which option is best. Every wallet is unique. Some are more convenient and easier to use, while others are less vulnerable to hackers and scammers. Which wallet is best for you is ultimately up to you to decide.
Please check Binance official website or contact the customer support with regard to the latest information and more accurate details.
Binance official website is here.
Please click "Introduction of Binance", if you want to know the details and the company information of Binance.
Comment by Hans
April 24, 2024
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