By Lumai Mubanga. firstname.lastname@example.org
In our use of fiat currency like the dollar and many other currencies, we use physical wallets made of leather or other materials to carry our money around. We may not be faced with hard decisions to make when purchasing these wallets. We are in control and we decide when to spend our money.
Similarly, Bitcoins and other Cryptocurrencies are stored in crypto wallets. However, we need to make an informed decision based on understanding what these wallets are.
Each user must do his or her own research to determine which wallet will be more beneficial. Bear in mind that, when it comes to choosing a bitcoin wallet, you need to make a tradeoff between convenience and security. Wallets are designed with these two aspects in mind.
This refers to the easiness with which you find it easy to access and control your wallet and funds. While many designers have this aspect in mind, the user needs to define their own level of control that they can exercise when accessing these wallets. You have an option to leave that aspect to a third party or take full control and responsibility. However, you can only have 100% control of your funds if you have 100% access to your wallet. This though is traded off by some users when security issues are considered.
Bitcoin wallets come with some level of risks attached to their use. These risks are at both personal level and network level. If a user forgets the password to the wallet, he stands a big change to lose everything as there are no mechanism in place to reset or recover it. So, a user takes personal responsibility to secure this password. It is with this in mind that some users decide to leave this aspect to trusted third parties.
At a network level. A user may decide to have this managed by a third part entity. In this case the platform were the user have the wallet e.g. coinbase takes full responsibility. At this level, the user may surrender the security of the wallet to the network. Should the network be hacked into, the user still suffers loss. However, it’s important that users familiarize themselves with terms and conditions of services if these are provided.
Some Hot Wallets
Among the most popular online wallets is coinbase.com and the blockchain.info wallet. These can be accessed online through computers and smartphones as apps. What the pros and cons?
Coinbase is the easiest to use but your private keys are held up in the clouds and you never get to see it. Some clients detest this because it means that you put your trust in a third party to manage it for you. This defeats the all essence of the very ideals of the designers of this system – privacy.
On the other hand, some users feel safe because it gives then and advantage of having access to the wallet at their fingertips. On the other hand, wallets like Mycelium and electrum do not hold your private keys on the cloud. Instead, as a user, you hold your own private key and you assume responsibilities regarding its safety and usage.
At the end of the day, it’s the user’s responsibility to choose what type of wallet to use.
So when it comes to crypto wallets, the User needs to understand the pros and cons of each and make a personal decision.