List of Wallet Protocols You Must Have

Do you know where traders and investors store their cryptocurrency? They store it in a digital wallet, which is popularly known as a crypto wallet. If you want to trade crypto, you need to own a crypto wallet.

There are three critical components of trading in a crypto market, i.e., Cryptocurrency, Exchange, and Wallet. As we store our fiat currency in our wallets or bank accounts, similar cryptocurrencies are stored in a crypto wallet. Because the currencies don’t have a physical existence, they are not physically stored in a wallet. Instead, you get a set of private and public keys that help you to transfer cryptocurrencies from one Wallet to another. 

There are different types of wallets where you can store your crypto. At the same time, some wallets are connected to the internet; some works offline. But most of these wallets are vulnerable. 

Recently, there have been many cases where investors lost their crypto holdings because of vulnerabilities in the wallet protocol and exchange software. As all your currencies are stored in a wallet that is connected to the internet, there are many risks. To avoid this, you can use White Label Exchange Software and Secure Crypto Wallets.

If you want to keep your Wallet and currencies safe, follow our guide. In this post, we will discuss about the wallet protocols you must have to keep your cryptocurrencies safe.

It is a digital wallet where you can store your cryptocurrencies. You can use this Wallet to send and receive crypto. There are different types of wallets. Some wallets support only a single currency, while others can be used for multiple currencies. A wallet can be a physical device or a software program. It stores your secret keys, which are used to make transactions. Wallets are mostly developed by the Crypto Exchange Development Company. These companies develop exchanges as well as wallets.

Here are the different types of crypto wallets.

• Desktop Wallet: These wallets can only be downloaded and used on desktop or laptop. Once you download it on your computer, you can only access it from there.
• Mobile Wallet: You can use this Wallet from your mobile phone. You can download it on your smartphone and access your Wallet from your phone.
• Web Wallet: These wallets are directly connected to the internet. The Wallet provided can control your wallet functions. For example, when you store your crypto with centralized exchanges. While trading with the White Label Crypto Exchange, you can use any type of Wallet.
• Paper Wallet: Here, you can print your private and public keys on a paper and keep it with you.
• Hardware Wallet: It is a device that stores your private and public keys. It is very safe and secure.

Funds are always stolen from places where it stored. And because you store your crypto in your Wallet, hackers will always try to find vulnerabilities. Once they find it, all your funds will be gone. Crypto wallets have always been prone to security risks. Here are the different types of security concerns related to the crypto wallet.

• Malware
• Phishing
• Virus
• Key Logger
• Remote access to device

Here is a list of essential wallet protocols you must have to keep your crypto funds safe from hackers. You can easily avoid all the security risks by ensuring that your Wallet has all the below-mentioned security protocols.

Multi-Signature: Multi-signature wallets works like a dual access wallet. It cannot be operated with a single sign. It needs two or more signature to initiate a transaction. Here the keys are distributed. It creates an extra security layer to protect your funds. Instead of using a single signature wallet, you can choose a multi-signature wallet to make sure nobody can infiltrate the Wallet.

• Cold Wallet:
• Cold Storage is one of the best security protocols. Instead of keeping most of your crypto in a hot wallet, you can store it in a cold wallet. Cold wallets are not connected to the internet. These are offline wallets. Paper wallets and hardware wallets are cold wallets. Because it is stored in a physical form, there are fewer security risks like viruses, malware, and remote access. Traders save most of their funds, i.e., approximately 80% in a cold wallet. It ensures 100% safety.

• Warm Wallet:
• Most of the people use the warm Wallet to store their crypto because it is a perfect blend of a cold and hot wallet. Here, unlike a cold wallet, you can directly make any transactions by confirming the transactions manually. This Wallet has enhanced security, unlike hot wallets. It is often protected by 2FA or multi-signature protocol. With this Wallet, you can easily send or receive money without worrying about any security risks. Most people save up to 15% of their funds in a warm wallet to keep it secure and ready to use.

• Hot Wallet:
• A hot wallet is used for day to day crypto transactions. The keys of this Wallet are directly connected to the internet, which makes it quite vulnerable. But it is essential to store your funds in a hot wallet if you don’t send and receive crypto quickly. Most of the software wallets you use our hot Wallet. Just because it is more vulnerable doesn’t mean your funds will be hacked. You can keep your Wallet safe by taking measures like choosing a strong password, keeping your device secure, and keeping your keys safe. Most people store 5% of their funds in a hot wallet, which helps them to transact with one another immediately.

• 3FA:

Earlier, there was only a 2-factor authentication protocol to keep the crypto safe. But now, you can use the 3-factor authentication process to enhance your wallet security. In three-factor authentication, there are three layers of added security to protect your crypto wallet. 

• First Layer: The first layer consists of a regular password to access the Wallet.
• Second Layer: The second layer includes something that only the user can access like, fingerprint or OTP. 
• Third Layer: In the third layer, the user’s physical trait is used as an additional requirement like retina scan, authentication code, voice recognition, password, or OTP.

You have to go through their different authentication process to access the Wallet. For example, first, you need to enter your password, then use your fingerprint and then use the OTP received on your phone.

• Web Wallet:
• Most of the people storing their funds with exchanges use this type of Wallet. These wallets are pretty risky as the central wallet provider can control the wallet transactions. You can access these wallets directly from the web without downloading the app. To enhance this Wallet’s security, you can use strong passwords and make sure the browser does not copy the keys. Also, make sure the interface is isolated.

• Security:
• Apart from all these protocols, you also need to make sure the Wallet provides additional security. Choose reputed wallets only. Check for security protocols before signing up. Check locks like SSL security marks to avoid scams like phishing. Use a strong password and protected devices to access your Wallet.

• KYC/ AML:
• Make sure the wallet provider follows the proper KYC/AML process. Before you sign up with a wallet, you have to go through the KYC/AML process. Here your identity information is taken and screened. It is done to make sure that you are not a hacker or criminal. Nowadays, there is an e-KYC and AML process to check your identity. Your data is run through the government database to make sure you are a regular citizen and not a threat to the wallet security.
  These are the wallet protocols you must have in order to protect your funds from internal and external threats. You can also use decentralized exchange platforms developed by White Label Crypto Exchange Software Development Company for additional security.