At CryptoSwede, we believe a cryptocurrency wallet is essential for storing your Bitcoin. There are many types of wallets to choose from including desktop wallets, paper wallets, and hardware wallets. One of the most popular is the Bitcoin web wallet. Many people find that these wallets are very easy to use and access. The downside is that they can be somewhat less secure than other types of wallets. Here are some things you need to know about a Bitcoin web wallet.
A Bitcoin Wallet Managed by a Third Party
The Bitcoin web wallet is one that is generally hosted and managed by a third party. This means that the provider of the wallet is responsible for maintaining a user’s public and private keys. Many people find this to be convenient, and that is probably why web wallets are so popular. There is no software to download to your computer, and you don’t have to spend hours figuring out how to use the wallet.
Convenience in Bitcoin wallets often comes at a price. In this case the price can be less overall security. You are essentially trusting the provider of the wallet to keep your Bitcoin safe. Their ability to do so will depend upon many factors and security measures. Even the best of these fail at times, and many people have lost their Bitcoin when a web wallet is hacked.
It also bears noting that Bitcoin is not a security that is backed by the federal government or an insurance program like you would find at a savings and loan institution. If the provider of the wallet decided to abscond with all of your digital tokens there is little chance that you could recover them.
Bitcoin Exchanges and Web Wallets
Perhaps the most famous example of web wallets are those which are provided to the customers of cryptocurrency exchanges. Exchanges like Coinbase and Bitstamp offer such wallets. An advantage of these web wallets is that they are compatible with many types of cryptocurrency. An individual with an exchange account can easily buy and store Bitcoin, Ethereum, or many other altcoins in a web wallet from an exchange. This means that there is no need to have multiple wallets for each currency.
The devil is always in the details, it seems. Exchanges have been a frequent target of hackers who want to steal Bitcoin. Bitstamp has suffered its own share of problems, but the most famous breach involved a Japanese exchange known as Mt. Gox. Bitcoin worth millions of dollars was stolen from the exchange, forcing the company into bankruptcy. Some people had a very difficult time getting their tokens back.
Anonymity can also be a problem with a web wallet. Bitcoin is designed to offer the user some measure of anonymity. This is one of its most attractive features. When an individual registers an account with an exchange this anonymity is essentially sacrificed. There are personal details required to open the exchange account, and those details can be linked to the wallet. An exchange has little protection if authorities try to force it to reveal the identities of account holders.
Is a Bitcoin Web Wallet the Right Choice for You?
A web wallet can be a very attractive option for those individuals who want easy access to their Bitcoin. It can also be useful for the cryptocurrency hobbyist that has a small amount of money to invest. For others that are involved on a grander scale, a hardware wallet might be a better choice. You should think about the kind of needs you have before you create a web wallet.
Do you want to be able to access your cryptocurrency wallet with any device that is connected to the Internet? You can with a web wallet. That means a lot to some people who are always on the go. Once again, however, there could be security issues with this approach. If someone gains access to your keys and credentials they could also access your wallet from any device.
*** Here at CryptoSwede you will find information on Crypto Mining the different cryptocurrencies as well as the best cryptocurrency exchanges. You can trade or you can set up trading bots instead and then store the crypto on crypto wallets. Later, spend them using crypto debit cards!***