Bitcoin Wallet

In our previous article, we talked about the Bitcoin exchange in Malaysia (Read more here).  We did mention that if you plan to invest in cryptocurrency in large sums, it is advisable to store them in “Cold wallet” rather than “Hot wallet”.  This article will discuss about “Cold wallet” and “Hot wallet”, and how to obtain them in Malaysia.

Many articles have praised the highly secured characteristics of cryptocurrency, but we are still hearing news of cryptocurrency theft (Read more here).  Why?  These thefts were due to poor cryptocurrency exchange security enforcement rather than the cryptocurrency system itself.  When you buy or sell Bitcoin via an exchange, your Bitcoin critical information such as “private key” and “public address” (collectively named as “critical info”) are controlled by the exchange operator.  Hackers who gained access to the exchange’s system will have control over these critical info, thus your Bitcoins are at risk.

[Bitcoins are stored in respective “public address” online (you can imagine that as “pigeon hole”).  Anyone who has the “private key” (the key to open the “pigeon hole”) that links to the respective “public address” can transfer the Bitcoins from one to another.]

So how could Bitcoin owners secure their cryptocurrency?  It is recommended that after you have purchased your Bitcoin from an exchange, transfer them into either “Cold wallet” or “Hot wallet”.  Then here comes the next question – What then are “Cold wallet” or “Hot wallet”?

Bitcoin wallet is simply just “private key” plus “public address”.  The difference between cold and hot wallet is where you keep the info.  “Cold wallet” means the critical info is stored offline while for “Hot wallet”, the critical info is stored online.

Example of “Cold wallet” is paper wallet and hardware wallet.  Paper wallet means you write the critical info on a piece of paper and keep it in your safety box physically.  Hardware wallet means those critical info are stored on a specially made highly secured USB device.

Example of “Hot wallet” is encrypted softwares that are downloaded onto your phone or PC to help manage the critical info.

From a security point of view, hardware wallet is the safest, followed by paper wallet and then software-based wallet.  But the cost of owning a hardware wallet is highest as well.

In terms of user friendliness, software-based wallet is most convenient as it can be downloaded onto your phone, while hardware wallet is slightly inconvenient as you need to carry an additional device with you.  The paper wallet is the least user-friendly wallet, and only recommended for tech-savvy users.

You can download software-based wallet from Google Play Store or Apple App Store.  For hardware wallet, it is recommended to order from the official website of Trezor, Ledger Nano S, or KeepKey to prevent tampering attempt from middle man.  If you are interested in paper wallet, we will cover it in another article.  Stay online!