Online crypto wallets are also called the browser or web-based wallets. They provide a hot way of storing cryptocurrencies.
Such crypto wallets operate in the browser just like any other site. A private key for accessing the coins is usually kept by the site owner.
Due to this, it is necessary to approach the matter of choosing the online crypto wallet with full responsibility, and so, only licensed companies that give real guarantees of the safety of funds must be chosen.
We analyzed all the pros and cons of such storage of cryptocurrencies. In the article, we will advise on choosing an online crypto wallet and give some examples of the most secure resources with a good reputation.
How to use an online crypto wallet
First of all, you need to create an account and verify your email or mobile number and set a password; be sure to enable two-factor authentication. And then the system will provide you with data you will use for authorization in the future.
Cryptocurrency exchanges are also referred to as online wallets.
As a rule, the following basic actions can be performed inside a wallet:
- check the balance in any of the cryptocurrencies that are supported by the site;
- transfer funds by specifying the recipient’s address and (in some wallets) choosing the commission rate;
- accept funds by generating your wallet address and transferring it to private persons or companies;
- check the transaction history for each specific asset.
This is the main functionality, but often, there are many additional options: fast internal currency exchange, investment portfolio management, etc.
Are online wallets safe?
It should be understood that when trusting your keys to a server that you don’t control; you must be sure of two things:
- the service hashes the private key (i.e. it encrypts it in such a way that it can be decrypted only by using a password);
- hashing is done correctly to prevent an attacker from decrypting the information.
A company that manages the wallet can pretty easily cheat a user at these points. Even if keys are indeed hashed, their base is a “tidbit” for attackers. If an error crept into the encryption, it is fraught with the loss of funds of thousands of users.
And even when there are no vulnerabilities on the part of the wallet, there is a likelihood that your password will be hacked if it is not so complex as it should be.
However, online wallets are perhaps the most popular option for storing cryptocurrency because they are very easy to use. You can send and receive transactions from any device with Internet access; it is enough to create an account in a few minutes and log in to the website or crypto exchange.
If you don’t store large amounts of funds on such resources, set the most complex passwords (preferably with the help of password generators), and carefully choose a site, then this is a good option.
Features and risks
- By using a web-based crypto wallet, you adhere to anonymity concerning third parties that can track your IP address, but at the same time, you reduce confidentiality concerning those who manage the site;
- Some services offer instant internal transfers. This allows to carry out transactions without waiting for a lock period;
- In addition to the service provider, you need to be confident in your own browser so that third parties wouldn’t have the ability to trap your passwords;
- Most wallets rather assign a new Bitcoin address for each use than reserve a permanent one for the account holder. In such cases, you shouldn’t post this address with the expectation of permanent use (for example, for collecting donations) since there is a risk that it will no longer be active when sending cryptocurrency;
- Since Bitcoin transactions are irreversible, any vulnerabilities for a crypto wallet are critical. The safest options are those that store users’ reserves in separate cold wallets.
There is also the risk of phishing – the fraud of a user with malicious software that looks like normal software. Malicious sites try to collect users’ credentials. A phishing site disguises itself as a regular one both in design and in URL (for example, c0inbase.com instead of coinbase.com). By entering the password on such a site, a person gives all the login data for access to a real wallet.
We recommend using crypto hardware wallets, such as Ledger, Trezor, etc., for storing cryptocurrencies. This method belongs to the cold and the safest storing.
Best online crypto wallets
The below-listed sites inspire confidence since they have been successfully operating for several years and have proved to be safe and convenient crypto wallets.
The Blockchain wallet
The Blockchain online wallet can be called the most popular in the world with more than 50,000,000 accounts in the system. It is easy to use and has a good reputation in terms of asset safety. Full control over the tools and the ability to recreate and use backups is given to a user.
Blockchain makes it possible to exchange currencies, such as Bitcoin, Stellar, Ethereum, USD Digital, and Bitcoin Cash, with low fees. Transactions are available in 30+ countries around the world, and you can choose any of the 25 supported languages on the site.
The Coinbase wallet
Coinbase is not only a wallet but also an exchange where 50+ currency pairs are traded. Its distinguishing feature is that its interface and all operations you make are as simple as possible; so, it is suitable for those who are just starting to get acquainted with Bitcoin and also want to quickly transfer fiat money into cryptocurrency and vice versa.
The fees are quite loyal; by the way, a discount is provided with an increase in the volume of transactions.
The wallet can be used in conjunction with decentralized apps, and you can add addresses to the contact list and giving names to them. Such currencies as BTC, ETC, BCH, ETH, LTC, as well as various ERC-20 tokens are available to be stored in this crypto wallet.
Keys are securely protected with the help of Secure Enclave technology and biometric authentication.
The BitGo wallet
This is a multi-currency wallet with multi-signature, multi-user control components, and state-of-the-art security measures that correspond to the industry standards. It is aimed at both private users and institutional investors who prefer this way of storing digital assets.
The main feature of the wallet is that it has three aspects: the first one has the right to initiate transactions on the account; the second one controls the policies and confirms the accounts, and the third one helps in accounting, taxation, and auditing.
To increase the level of security, the administrator can create various policies that, in one way or another, restrict the ability to transfer coins to or from the wallet.
Hybrid online crypto wallets
When several browser crypto wallets were hacked, hybrid options appeared in the market that use Javascript to create transactions and manage private keys. The main feature is that a user himself/herself manages his/her keys.
Strong Coin is an example of a hybrid wallet.
Features of this approach are as follows:
- A user can export private keys from his/her wallet to use them when working with another Bitcoin client or wallet, and if he/she makes backups, then access to his/her funds won’t go anywhere, even if the hybrid wallet itself stops operating;
- Users’ keys are stored encrypted on the server;
- One address belongs only to one user. Therefore, if you return the coins to the sender’s address, most likely he/she will receive them and the funds will not be lost;
- You can always see your account balance in the blockchain and make sure that the program displays it correctly;
- Javascript is not protected against malicious alterations, which can lead to losses for many users;
- If a user doesn’t use backup or key export, then the security of the hybrid wallet is not superior to the regular online wallet.
Much depends on a user’s browser; the latter is also susceptible to attacks. Most modern browsers don’t work very well with cryptography.
Advantages and Disadvantages of Web Wallets
Advantages:
- Accessibility from any device with access to the Internet
- Easy to learn
- Quickly get started – just create an account
- Functionality
Disadvantages:
- Relatively low security
- The need to trust your private keys to third parties
- The ability to crack a password by a malicious user
- Many unreliable projects in the industry
