A lesson that has been taught to all of us at a young age, “those who do not learn from history are doomed to repeat it.” This statement rings truer than ever in today’s time of economic uncertainty, doubt and struggle. Case in point, the coronavirus pandemic, which has affected us all economically, socially and politically. But not only is the economy struggling, but some experts also assert that we are not far off from another economic recession to the point where leading economists are writing books and holding public talks on how to deal with such an event that is so close to happening again (see Robert Kiyosaki).
With so many threats present and looming, what is something you can do right now to soften the blow, so to speak? Diversify — into something secure, decentralized and has a proven track record of holding its value, such as cryptocurrency.
This article will not go into detail as to why this is a smart move, rather we will introduce you to the first step of your diversification, a crypto wallet that works for you, the user.
A crypto wallet or cryptocurrency wallet is a medium in which users can store their public and private keys (essentially the access to your cryptocurrency). A cryptocurrency wallet can also be used to send and receive cryptocurrency to and from other users. In essence, a cryptocurrency wallet is like a portal to the ownership of your cryptocurrency.
This is why it is so important that your crypto wallet works for YOU and is able to accommodate your needs and activities.
At the moment, there are many crypto wallets available out there in the market and the variety in choice can make it difficult for beginners to choose the right crypto wallet that suits their needs. Below are some criteria that your wallet of choice should meet to truly benefit you, the user.
Secure — Because cryptocurrencies are decentralized and permissionless, there is no central entity that verifies your transactions and that can recover your assets in case of theft. The security of your private and public keys are in your hands, and since the crypto wallet is the medium in which your keys are stored, you want them to be as secure as possible. First time users of cryptocurrency are put in a position where, for the first time ever, they are in charge of the security of their own digital assets. This is why it is so important for you to pick a reputable crypto wallet that has a proven track record of security. Furthermore, when doing research on a potential crypto wallet, you want to see that they have put a lot of resources and emphasis on the security of their product.
No KYC (or as little as possible) — Know your customer, or KYC for short, are guidelines/policies which most financial services will implement to verify the identity and suitability of the customer. Often times, a company will implement a KYC policy because they are under obligation to do so by a government body. In the case of cryptocurrency, you want to maintain your anonymity by any means necessary. This is because:
- KYC means a single point of failure, the crypto wallet handling your cryptocurrency will now have access to your personal information, leaving you more exposed to security threats and theft
- KYC will mean a third party, such as a government body or perhaps another entity can limit your freedom and prevent you to do what you choose with your cryptocurrency by forcing the crypto wallet service to obey their rules
- Your privacy and anonymity is now non-existent since your crypto wallet that overlooks the security of your keys will now be able to tie your crypto activity and transactions with a real person (you)
- Giving up personal information in order to use a crypto wallet is something that users should avoid if possible.
Decentralized (or at the very least, non-intrusive) — A decentralized crypto wallet service will store your data on a decentralized network, similar to a blockchain. This will mean that only YOU, the user, will have access to the public and private keys and by extension, your cryptocurrency. No one, including the government or the crypto wallet service, will be able to access your data, let alone compel or deny certain actions or transactions with your cryptocurrency, which is how it should be. Only you should get to decide what you do with your cryptocurrency, and the most sure-fire way to guarantee this is to choose a wallet that is unable to access your data. Ideally, via decentralization or at minimum, your data should be fully encrypted and cannot be accessed by anyone, except you.
As mentioned above, this is a first, but very important step for people looking to join the crypto community and become a user of this revolutionary technology. Due diligence and research ought to be done by the user before they select the crypto wallet they will be sticking with, as it will have many implications in the security and functionality of their experience with cryptocurrency.