Cryptocurrency security has become an important issue. There are far more crypto investors and far more money, being invested in cryptos than ever before. At the same time, there are an increasing number of scammers and fraudsters, waiting to cast their spell on innocent victims. Cryptocurrency wallets form a basic part of crypto trade, it is where investors store their virtual assets. This report discusses crypto wallets in very simple terms, much effort has been put to eliminate complicated jargon and language. We also discuss security issues related to cryptocurrency wallets.
Until 2017 and for most part of 2018, crypto space had an exclusive set of inhabitants – tech savvy and active in tech related communities and forums. While the crypto industry had not advanced much, there were numerous technical issues that needed to be understood and implemented at the user level. A well knit tech community ensured that, research findings and analytical comments spread like wildfire – within that narrow crypto space. To put it simply, crypto participants understood these tech related happenings quite easily.
As time went by the number of crypto currencies surged, interest in crypto trade rose and the crypto community became much bigger. Participants began to see the opportunity of making money by trading cryptocurrency. One important fact was that, a large proportion of these newcomers were first timers – people with non-technical backgrounds. The issue of security gained importance and it continues to do so.
Crypto wallets are much like conventional wallets except that, they cannot be touched or felt – they are virtual. We will come to the concept of hardware wallets in a moment. Crypto traders are quite familiar with, keeping their cryptos in a wallet created within their crypto exchange account. As security issues became more relevant, the risks of leaving cryptos in the exchange wallet become more glaring.
Just to clarify one small issue, a crypto wallet does not actually ‘store’ the cryptos. It merely stores the wallet keys to a location of the blockchain where the cryptos are held. In general a wallet has two keys, a private key and a public key. The private key is much like a password that, should be known only – only to the owner of the wallet. The public key of the wallet is like an email address or bank account number. This would be required by people who wish to transfer cryptos to your wallet.
No secret that the security of the crypto wallet would be at stake if, the private key is compromised. So the simple solution might be to ensure that, you disclose the private key to absolutely no one. Unfortunately there is one more way in which a crypto fraudster could, ‘steal’ your private wallet key. This involves hacking your online wallet by complex algorithms and code.
The point is that a crypto wallet that is connected online, can technically be hacked. We would refer to these wallets as ‘hot’ wallets, implying that they could be easily accessed by the owner to transact cryptos. Convenient to use but, significantly risky to store cryptos with a large value.
Now the better side of this story, we define a ‘cold’ wallet. Unlike hot crypto wallets that are frequently accessed (by the owner) and are generally placed online – cold wallets remain offline. Another important difference between hot and cold wallets is that, no key related to a cold wallet is ever made public or shared (with anyone). A cold wallet would generally be used to stock cryptos which would then, be moved to a hot wallet when they had to be transacted.
Still on the issue of a cold wallet, the wallet could exist on a computer that is not connected to the internet. Another innovation allows a cold wallet, to be placed on a dedicated piece of hardware – something like a thumbdrive that most of us are aware of. This is considered to be both handy and safe – the device will no doubt need to be stored in a very secure place.
The above report should give you a fairly clear idea about cryptocurrency wallets. More importantly it, stresses the importance of wallet keys and why private keys should be kept confidential. It also highlights the fact that the keys of a cold wallet, would never be shared with anyone.
Just keep in mind that there are various security issues related to crypto operations, the concept of wallet security is just one segment. And interestingly, the issue of security for crypto wallets is far from complete. Technology and innovation will be ongoing, scammers will come up with a new bag of tricks, security loopholes will become apparent and technology, will need to research and come up with better solutions. In the world of cryptocurrency - security is a journey, the destination keeps shifting further away.
GLITZKOIN: A short note about the track record of the GTN token. Priced in the $0.13 to $0.20 range during the ICO that ended in June 2018, the GTN token starting trading first on Stellarport and then on CoinTiger and DobiTrade. The token price during much of 2018 was in the $0.20 to $0.22 range. The token currently (July 2020) trades in the $0.38 to $0.40 price range. While CoinMarketCap did list the GTN token fairly early, the number for ‘Circulating Volume’ was stringently checked by the portal. During the checking process, GTN was ranked at around 2,000 on CoinMarketCap. In early 2020 the portal finally agreed on a Circulating Volume number that, was very close to what Glitzkoin had submitted months ago. Publishing the verified figure of 247 million GTN in circulation, CoinMarketCap did a re-rank for GTN and the token was moved up from roughly 2,000 to around 200 – a very impressive jump. We are happy with the thorough analysis done by the portal as it was, totally unbiased and very detailed The GTN can be tracked on CoinMarketCap at https://coinmarketcap.com/currencies/glitzkoin/