Security risks of software wallets for cryptocurrency
The future of currency is digital and more people need to be aware of their options. There are many ways to store your cryptocurrency these days. Mainly these ways of storing digital assets are classified into two categories, which are software and hardware. The biggest difference between the options is that on is online and the other is offline.
Software wallets are often called hot wallets and these wallets are all online. Hardware wallets are known as cold wallets and these wallets are completely offline. For this particular reason hardware wallets have been deemed safer than software wallets.
Let us talk about software wallets in more detail:
Ever since Bitcoin was developed, digital currency wallets have existed. These software wallets come in mainly two forms, online and desktop wallets. On your IOS and Android phone, you can also download these wallets. Mobile hot wallets are also called hybrid wallets because of their mobility.
The fact that they are absolutely free and can carry all digital currencies is the best thing about owning a software wallet. Let us first address the “all crypto keeping” aspect. Each time a new cryptocurrency enters the market, a “ICO” is produced. If there is a place to store it, the ICO is only then functional. People who build digital currency are typically the same people who support it by creating a wallet as well.
The more prominent cryptocurrencies such as XRP, Litecoin, and Ethereum all also have various digital wallets for them. Each wallet has its own unique features, customization, and functionality to choose from. Less popular or less common cryptocurrencies usually have one wallet with basic features such as trading, selling, and buying.
A strong argument for hot wallets is the fact that they can hold new and less common cryptocurrencies, while cold wallets mostly cannot offer this feature.
Another point that makes hot wallets popular is the fact that they are free to use. All you need to do is find a hot wallet that matches your needs and then register to use it. The free factor is the main reason why these wallets are so popular, especially for the new crypto users. Another argument that makes hot wallets famous is that they’re free to use. All you need to do is find a hot wallet that suits your needs and register to use it. The free factor is the main reason why these wallets are so popular, particularly with new crypto users.
But are these wallets safe? Will your digital assets be completely secure?
If I was to be completely honest with you, then I will have to say that no, you digital currency will not be completely safe from hackers and cyber criminals when using software wallets. The security of your software wallet is only as good as the website you chose to get your wallets from. And if you look at history, even the CIA and NASA have been hacked and these companies have the best cyber security in the world.
All software wallets store your data on a cloud or an online server. Online servers are not that hard to hack, as we already know. You might be the victim of a malicious software or a fraud, and you might even be the victim of someone who knows the value of your digital currency.
While there have been several security steps taken by most hot wallet websites to ensure the protection of your crypto. It just takes a tiny loophole to lose all your digital currency, such as a website update. This has happened before and will continue to happen in the near future. For now software wallets are not that safe to use.
Some websites like coinbase, if you use their hot wallet, offer 100 percent insurance. This is pretty rare, though, and is very comforting. But with the same pledge, other websites will cheat you as well. Even if you link your cold wallet to a compromised computer device, most hardware wallets like OPOLO hardware wallet have taken some drastic safety steps. It’s still difficult to hack your digital properties.
So should you be using a software wallet?
It depends, if you for example are dealing with new cryptocurrencies or are very new to the crypto world and have minimal investment. For example you are trying to learn the crypto trade with a small budget, then yes you should use a software wallet. However, if you want to properly earn through digital currency and are going to invest in thousands then I would suggest you stay away from software wallets.
You can never truly escape the use of cryptocurrency software wallets. However, you can smartly transfer your crypto to a cold storage wallet. Currently online sources for storing cryptocurrencies are not completely secure. Maybe in the future, but for now software wallets are not safe from cyber criminals.