Cryptocurrency Wallet Vancouver
For simplicity, we will discuss bitcoin in this section, although the following applies equally to all cryptocurrencies.
Hot wallets are applications on your phone or computer that interact with the Bitcoin network. They are known as hot wallets because they run on devices that are connected to the internet.
All bitcoin transactions require a cryptographic signature before being broadcast to the network in order to prove that the transaction is being authorized by the wallet’s owner. Hot wallets allow you to generate and store your private keys as well as create and send out transactions. The ability to do these on the same device makes them extremely convenient, albeit somewhat risky.
Since your private keys are being stored on a device connected to the internet, if this device is compromised (remotely hacked, for example), then the attacker may be able obtain your private keys and steal your coins. Because this scenario is unlikely, however, it is still reasonable to store small amounts on your hot wallet. Some of the most popular hot wallets are Trust Wallet, Exodus, and Metamask.
These small hardware devices that have never and will never be connected to the internet, are the most secure way to store your digital assets. They allow your private keys to be generated and stored in a permanently offline environment.
Your hardware wallet interacts with an online device (your phone and computer) in order to produce transactions. Your online device prepares the transaction and broadcasts it to the network, but the crucial step in between, where the transaction is signed with your private keys, occurs in the isolated environment of your hardware wallet.
If your hardware device is stolen, a 4 to 8 digit PIN is required in order to unlock it, and the thief only gets three shots. Please do not make your PIN code your birthday!
Just like hot wallets, as long as you still have your backup passphrase, you can always recover your funds even if your hardware device is lost or damaged.
The most popular hardware wallets are made by Ledger and Trezor. Vancouver Cryptocurrency Exchange is proud to be an authorized retailer for Ledger hardware wallets. We offer both the Nano S and Nano X for sale.
When you store your crypto on an online exchange, such as Binance or Coinbase, you are giving up custody of your coins. Centralized cryptocurrency exchanges are often called custodial, since custody of the coins belong to the exchange, not to the user. Although you are able to send and receive coins via the exchange wallet, you do not hold the private keys to your assets. This would be like leaving your physical gold or silver at the dealer’s store instead of bringing them home.
When you send some Bitcoin from your Coinbase wallet to a friend’s wallet, for example, you are in fact requesting that Coinbase send your coins to your friend’s address, and you are depending on them to accept this request and execute it in a timely manner. If for whatever reason they are unable or unwilling to do so, you have no recourse. If you need quick access to your coins, there is a chance you won’t get it. As the saying goes, “Not your keys, not your coins”.
There is a long history of exchanges being hacked, going bankrupt, or turning out to be a pyramid scheme, resulting in lost user funds. Security and reliability of the major exchanges has admittedly improved overtime, so if you must keep your coins on an exchange, which we do not recommend, you should choose one of the few trusted exchanges that have thus far stood the test of time: Coinbase, Gemini, Kraken, and Binance.