Blockchain and cryptocurrencies are becoming a part and parcel of our daily lives. In the past several years, the ground-breaking innovation of blockchain has found massive adoption in different areas and industries. Following its ever-growing popularity, there has also been a significant increase in the number of crypto-based investments.
The anonymous nature of decentralized currencies makes them untraceable and thus, susceptible to potential threats of fraud, hacking and money laundering. Hence, for crypto-investors, storing their coins securely is a major concern. To meet the needs of these crypto-holders, there is a variety of crypto wallets available in the market, as keeping coins on an exchange is far from remotely safe.
These wallets are broadly categorized as Hard and Soft wallets. Hard wallets are smart devices that operate in an offline mode making them immune to the threat of hacking. On the other hand, soft wallets, are computer/mobile programs that work on an Internet connection. Internet connectivity is what makes soft crypto wallets exposed to security threats and a less preferred way of digital currency storage.
While hard wallets come for a price (the best of them are expensive), soft wallets are available for free use. Thus, soft wallets offer cryptocurrency storage for no cost at all and hence, are most commonly used, despite their insecure nature. This is not to say that all soft wallets are likely to be hacked. Some are obviously better than the others and provide the failproof security of a hard wallet. Recently, there has been a surge of introducing new features in soft wallets to mitigate security risks.
For instance, back in the day, user private keys used to be complex and yet could be guessed or hacked. But now HD (Hierarchical Deterministic) wallets are available that generate user’s private keys from a sequence of common English words which are a challenge to guess. Earlier, all soft wallets stored user private keys on a cloud-based server. So, if somehow the server got hacked, all the user accounts could be liquidated. Now some soft wallets facilitate key storage on the device itself, thus, giving the full security control to the users themselves.
Further, there are cases of losing the device or getting the device stolen. Well, the industry is at work to mitigate this security threat too. Recently, an HD wallet app was referred to me by a friend of mine looking for free referral loyalty points. So, I decided to check it out. What really hooked me was the feature of ANTI-Theft WIPE, that enables users to wipe the wallet data from stolen device. The wallet app is PINT. You can check it on Google Play.
The point is that there are definitely security issues with soft wallets. But with the soft wallet industry evolving swiftly, these issues soon will be a thing of the past.
