Key Insights
There is a pressing need for secure crypto wallets in India.
Investors looking to securely store their holdings should choose a wallet based on their everyday needs.
Most wallets require a trade-off between security and ease of access.
Some of the best ways to secure your crypto wallet is by applying 2FA, software updates, considering hardware wallets and steering clear of phishing scams
Crypto is a big deal in India. However, a new issue arises with this speed-up in momentum:
How can crypto speculators securely store their digital assets?
The major method of storing crypto is via a wallet. These tools play a major role in safeguarding assets and transferring them when needed.
But what is a crypto wallet? Moreso, how can you use one to store your holdings, especially in a growing market like India?
This piece breaks down everything you need to know about these highly important tools, as well as practical tips for securely managing your assets in 2024.
Understanding Crypto Wallets
Think of a crypto wallet as a piece of software or hardware. It allows its owner to store, manage and trade cryptos like Bitcoin, Ethereum, and others.
It is no different from a bank account—but for crypto.
The core difference between a crypto wallet and a bank account in this case, is that crypto wallets don’t store funds physically.
Instead they store private keys, which are used to access said assets on the blockchain.
There are two major kinds of wallets you should know of:
Hot Wallets
These wallets are connected to the internet and are used by owners who transact frequently. They allow easier access with a few screen clicks and are perfect for on-the-go spending.
Good examples of hot wallets include mobile, web, and desktop wallets.
While these wallets offer easy access to funds, their major disadvantage is that they are highly secure—but not as secure as the other kind.
Cold Wallets
These are the opposite of hot wallets. Cold wallets are the offline kind and often come in the form of hardware devices.
They are best for storing crypto for the long-term and are not suitable for everyday purchases.
This is because of issues with “ease of access”. They also provide the best security against hacking and can be the perfect solution depending on their user’s needs.
Regardless of kind, crypto wallets work in a relatively simple way.
They simply generate a pair of cryptographic keys: A public key and a private key.
The public key is like a bank account number which can be shared to others to receive payment.
The private key as its name implies, is like a password. This is what secures the wallet and is used to access or manage assets.
If an unauthorized person gains access to one’s private keys, the wallet’s contents are as good as gone.
Types of Crypto Wallets
Here we dive deeply into the “types” of wallets.
While the “kinds” of crypto wallets are the hot and cold, the “types” are even more numerous.
Here are some of them, to be chosen based on need.
1. Mobile Wallets
These are some of the most common kinds. They are designed for smartphones and are popular because of their convenience.
Mobile wallets are great for day-to-day transactions. They allow quick access to funds and are on the app lists of most crypto-savvy users.
Best examples include apps like Trust Wallet and Coinbase Wallet.
It is important to note that while mobile wallets are convenient, they are vulnerable to malware and hacking if a phone isn't adequately protected.
2. Web Wallets
Web wallets are hosted online and are accessible through browsers.
The core feature of this type is that they are user-friendly and convenient for beginners.
Platforms WazirX and ZebPay (popular exchanges in India) offer built-in web wallets that are worth checking out.
The downside to web wallets is that while they offer easy access, they are even less secure compared to other types.
This is because they are very prone to phishing attacks. They can also be compromised by no fault of the user, if the service provider itself is hacked.
3. Desktop Wallets
These wallets are similar to apps like Microsoft office or VLC, in that they are installable on a computer.
They provide a good balance between security and usability and are therefore a major go-to choice for many.
Great examples include Exodus and Electrum.
The major advantage of this kind is that they are not connected to the internet unless they are actively being used.
The disadvantage is that if a computer is infected with malware, said wallet can be drained very easily.
4. Hardware Wallets
These are some of the 10/10 types of crypto wallets when it comes to security.
They are a kind of cold wallet that stores private keys offline. This makes them the most secure option on this list.
Popular hardware wallets like Ledger Nano X and Trezor are mostly used by long-term crypto holders.
The main disadvantage of this kind is that they can be quite expensive and can go as high as $31,000 INR ($500).
However, their benefit far outweigh the price many times over. Hardware wallets are perfect for hardcore investors who don’t need to access their crypto daily.
5. Paper Wallets
This kind of wallet should be avoided unless necessary.
Paper wallets are merely physical bits of paper on which private keys or seed phrases are written.
While they are a kind of cold wallet (in a way) and are immune to hacking, they can still be damaged physically, lost or even stolen.
In the rare event that a paper wallet is the best option, make sure to store it in a secure location. Like a safe for example.
How to Safely Store Your Crypto in India
This is the bread and butter of the entire guide.
If you’re dealing with crypto in a country like India (where the regulations are still in development) here are some things to know.
Choose A Wallet Kind/Type
Which wallet best suits your needs? Do you need access to your crypto daily? What are your views on security?
These are some of the biggest questions to ask before choosing a wallet: Whether hot or cold. Whether paper, web, mobile or hardware.
2. Enable Two-Factor Authentication (2FA)
If you have chosen a wallet kind/type already, make sure to always enable two-factor authentication.
This adds an extra layer of protection to things and makes it extra hard for any would-be attacker to run off with funds.
Keep in mind that this step might require some identity verification through a second device or application.
2. Use a Hardware Wallet for Large Holdings
If your holdings are substantial, consider the benefits of a hardware wallet. Storing your private keys completely offline reduces the risk of online theft and hacking attempts.
3. Avoid Sharing Private Keys
Never share your private keys—under any circumstances whatsoever.
One of scammers’ favourite ways of stealing crypto is by tricking users into revealing their keys.
They do this through advanced social engineering and can pose as support staff, romantic partners, and so on.
Be cautious and ignore any requests for your private key information.
4. Keep Software Updated
If you're using an on-the go wallet like mobile/desktop/web, ensure that the software is always up-to-date.
Security patches and updates only take a few minutes. They are also important for protecting your wallet from vulnerabilities.
5. Be Aware of Phishing Scams
Phishing scams are everywhere—especially in the crypto space.
Scammers often create fake websites or send emails that look legitimate. All of these are tactics to trick users into entering sensitive information.
Always double-check URLs and never click on suspicious links.
6. Store Backup Phrases Safely
Private keys can be hard to remember. As a result, most wallets generate a backup phrase.
This phrase is a set of words that can be used to recover your funds if you lose access to your wallet.
Always store this phrase in a safe place. Store it separate from your wallet and never share it online.
Crypto in India is likely going to become more popular as the years pass. This means that the need for secure crypto wallets will only grow.
Remember to choose the best wallet based on your needs and to practice safe crypto handling at all times.
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