The risks of cryptocurrency wallets
Cryptocurrency continues to dominate headlines; and it’s no longer just focused on Bitcoin.
Speculators are now flinging their money into hundreds of newer cryptocurrencies, such as Ripple, Litecoin and Doge.
These so-called “altcoins” are risky enough, because their prices (at time of writing) are highly inflated. But the risks don’t stop there. Storing your newly acquired cryptocurrency isn’t a straight forward process and is potentially insecure.
When you buy cryptocurrency, your first option is to leave the coins in the exchange you bought them from – local examples include Cryptopia and Dasset. But this isn’t recommended, since exchanges are as yet unregulated and there’s always a risk they’ll be hacked.
Unlike with banks, there’s no insurance or legal recompense if your money is stolen from a cryptocurrency exchange.
So where should you move your digital currency to? The answer is a cryptocurrency wallet. But here’s where things get complicated, because there are several kinds.
Firstly, let’s get a grip on the basics. The way all cryptocurrency wallets work is that you have a “public key” to receive money, and a “private key” to send it. The latter is the most important to safeguard, because if someone discovers your private key then they can steal all of your money.
The simplest type of wallet to use is a digital one – usually an app, but there are also online versions. A few of the popular apps are Jaxx, Bread and Mycelium. Some digital wallets only hold Bitcoin, but others (such as Jaxx) can hold multiple types of cryptocurrency.Read more at Stuff.