The first thing to consider is whether a wallet is custodial or noncustodial – in layman's terms, who has the keys for the blockchain address?
“Not your keys, not your coins” is the mantra of crypto, but surprisingly, some wallets (exchange wallets, for example) don’t give you control of the private keys for the blockchain address where your assets are; instead, they control the keys themselves, giving you a “login” for their platform instead.
The risk? You’re entrusting your assets to their security infrastructure. If the exchange is hacked, faced liquidity pressures, throttled or shut down, your coins and tokens go with it; with only a login and no private keys, you’re relying on the platform for your access, and can’t simply retrieve your assets yourself. This is not true ownership, something that needs to be taken into account when you’re considering how to secure your coins.
Hardware wallets are the most secure way to keep your digital assets safe. Hardware wallets are physical devices used for storing your private key in an encrypted, offline environment. Put simply, hardware wallets allow you to perform all your operations when connected to your computer or phone, without ever letting your private key “out”, on the Internet or on your device.
Therefore, your private keys remain safe from online hacks or virus threats while managing or transferring your crypto assets. That’s why hardware wallets are not vulnerable to such cyberattacks, unlike exchanges and other hot wallets.
When you own crypto, what you really own is a private key that gives you access to your coins. You need to keep this key completely safe. Ledger wallets are the best way to own and secure this key.
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