The issue of security in crypto storage has been a major setback over the years with malicious attackers increasing day by day. According to a report by Chainalysis, investors lost nearly $14 billion in 2021, most of which resulted from compromised DeFi protocols. The trend has continued this year as more and more people flock to the DeFi market in search of life-changing opportunities. Is the gamble worth it if stakeholders don’t know how to securely store their digital assets?
Before the invention of DeFi, most crypto investors relied on centralized exchanges for crypto storage. However, it gradually became apparent that even these custodial wallets are not as secure as expected. There have been several occasions where major crypto exchanges have been hacked resulting in millions of losses in user funds. With DeFi now in the picture, crypto-savvy investors are opting for non-custodial wallets, given that one has full control over their private keys.
Metamask is one of the pioneers of non-custodial wallets; it claims more than 10 million monthly active users (MAUs), according to an update from its developer, ConsenSys. This DeFi-oriented wallet is designed as a browser plugin, which means users need to download and install the official extension (add-on or plugin). Once the installation is complete, users can create a password, after which metamask will generate a 12-word passphrase (master key).
Initially, metamask only supported the Ethereum blockchain, but it has since evolved to include other ecosystems including BNB Chain, Avalanche Network, Fantom, and Polygon. DeFi users in all of these blockchain environments can use the metamask to store their digital assets, as long as they change their network icon when they switch platforms. Importantly, Metamask users are in complete control of their private keys, which means no one can compromise their funds without the 12-word backup phrase.
Ambire is another non-custodial wallet that is friendly enough for beginners and veterans alike. Unlike metamask, this open-source wallet was launched as a web application, allowing users to sign up through their emails. This design reduces the tedious work of managing seed phrases that can easily get lost if not stored properly. Meanwhile, Ambire users retain full control of their wallets and can opt for self-hosting as well.
Other added benefits of this noncustodial wallet include hardware wallet support, automatic transaction fee management, integrated exchanges and cross-chain transfers, and support for multiple networks (Ethereum, Avalanche, Fantom, Arbitrum , Polygon and the BNB chain).
When it comes to ecosystem governance, Ambire offers a native token called $WALLET, which doubles as a reward tool for users of the platform. $WALLET holders can vote for developments or integrations with other DeFi platforms.
- ledger portfolio
Ledger is one of the main hardware wallets that exist today; it was launched in 2014 to meet the growing need for offline storage of private keys. By design, ledger wallets are device-based and come in the form of USB drives. Unlike hot (online) wallets, it is quite difficult for hackers to gain access to a ledger wallet via the web. A good number of crypto veterans store their digital assets in the ledger wallet given the security attributed to offline storage.
Notably, there are two versions of the ledger wallet; Nano S and Nano X. The former was the first to debut and included support for multiple cryptocurrencies and up to 20 apps. On the other hand, the Nano X (latest version) supports up to 100 apps and Bluetooth connection, allowing users to manage their crypto assets from anywhere. Ledger’s biggest competitor is the Trezor wallet, which also has a large share of the hardware wallet market.
Crypto may be a land of opportunity, but anything can be gone in the blink of an eye. It is prudent for participants in this market to perform proper due diligence before investing in a project. More importantly, crypto users should be careful in choosing where to store their newly created wealth. The few examples in this article are a good starting point, but caution should be exercised at all times.