If the blockchain space were to have a theme song, Katy Perry&a;rsquo;s &a;ldquo;&l;em&g;Hot N Cold&a;rdquo; &l;/em&g;song may just be the winner. In the world of &a;lsquo;hardware wallets&a;rsquo;, there are some very important features that need to be identified and explained to those investors breaking into the space.
&l;strong&g;Understanding Hardware Wallets&l;/strong&g;
With over 1,200 cryptocurrencies in existence, and growing, it is essential for investors and those breaking into the space to understand how to secure their digital currencies and investments properly.
The first question to ask is how you&a;rsquo;re going to store your funds. The answer is simple, so you think&a;mdash;you need a wallet or some platform to hold your funds. Sure. But what kind? Yes, there are variations as to the kind of wallet and why one may be favorable over another, depending upon the transaction you are engaging in.
Let&a;rsquo;s talk about the only wallets you need to know about&a;mdash;hardware wallets.
For those investors looking for long-term cryptocurrency storage, it is recommended to divide funds into &a;ldquo;hot&a;rdquo; and &a;ldquo;cold&a;rdquo; wallets. Many investors in the space who hold digital assets and currencies utilize both hot and cold wallets for different storage purposes.
&l;strong&g;Hot Wallets&l;/strong&g;
&a;ldquo;Hot wallets&a;rdquo; are &l;a href=&q;https://www.blockchain-council.org/cryptocurrency/hot-wallet-vs-cold-wallet/&q; target=&q;_blank&q;&g;comparable&l;/a&g; to your bank&a;rsquo;s checking account&a;mdash;where they are used for the everyday spending of cryptocurrencies, typically holding only small amounts of any fund(s). It&a;rsquo;s similar to the physical wallet we carry on us on a daily basis. The biggest feature to know about these types of wallets is that they are almost invariably connected to the Internet in order to be readily usable. You can see where this may cause concern when it comes to security and vulnerabilities.
&l;strong&g;Cold Wallets&l;/strong&g;
On the other hand, &a;ldquo;cold wallets&a;rdquo; are comparable to your average savings account, used for long-term secure storage of your cryptocurrencies, typically holding larger sums of monies that are not intended to be touched or used very frequently. Unlike hot wallets, cold wallets are not &l;em&g;actively &l;/em&g;connected to the Internet. By &l;em&g;actively&l;/em&g;, I mean that there may be some battery or Wi-Fi enabled feature that could allow it to connect to the internet.
For security purposes, it is &l;a href=&q;https://www.forbes.com/sites/rachelwolfson/2018/04/25/security-officials-weigh-in-on-protecting-cryptocurrencies-following-myetherwallet-hack/2/#7f68ec0f3424&q;&g;smarter&l;/a&g; to keep the majority of your assets in a cold wallet, while a smaller portion of your funds are kept in the hot wallet for purchasing and sales transactions. Why? A cold wallet makes it much more difficult for hackers to steal your funds, because it&a;rsquo;s not connected to the Internet, or any Wi-Fi enabled services.
While the current wallets out there are functional, they are still difficult to use, as many of the features leave the user exposed to hacking attempts. One company, &l;a href=&q;https://www.xeeda.io/&q; target=&q;_blank&q;&g;Xeeda&l;/a&g;, has had made it its mission to change the way in which users access their wallets and allowing for trading, exchanging, and other transactions that may come along.
&l;strong&g;If We Are On The Go, How Can We Take Our Wallets and Funds With Us?&l;/strong&g;
Moving past the structural aspects of the wallets, we next turn to security, convenience, and accessibility. When it comes to hardware wallets, there isn&a;rsquo;t a &l;em&g;truly mobile&l;/em&g; wallet out there that allows you to plug into your smartphone. Recognizing that it isn&a;rsquo;t the first on wallets, Xeeda is the first in developing a hardware wallet that connects directly to the smartphone,&a;rdquo; said Kevin Maloney, CEO of Xeeda. The &l;a href=&q;https://www.nasdaq.com/press-release/xeeda-partners-with-zencash-to-launch-worlds-first-cryptocurrency-hardware-wallet-designed-solely-20180404-00609&q; target=&q;_blank&q;&g;Nasdaq&l;/a&g; described Xeeda in a report as a simple, secure, and convenient way to access, exchange, and manage bitcoins and other digital currency assets directly from a smartphone.
Maloney told me that the company believes that three-quarters of the audience will benefit from having that mobile access because most of these folks are very comfortable with their mobile devices and are always on the go. &a;ldquo;They prefer to transact on the market, whether up or down, through the convenience of their mobile device,&a;rdquo; says Maloney.
Xeeda&a;rsquo;s Chief Revenue Officer, Scott Jackson, added that in an already established space, there is still an imbalance when it comes to ensuring compliance, security, and peace of mind for all users. &a;ldquo;Right now, there is a lack of a &l;em&g;truly&l;/em&g; mobile solution for a hardware wallet that is designed specifically for smartphones.&a;rdquo;
&l;em&g;Ensuring Compliance and Regulation&l;/em&g;
&a;ldquo;We aren&a;rsquo;t storing anyone&a;rsquo;s cryptocurrency, instead, we are storing their &l;em&g;personal access keys&l;/em&g;&a;mdash;the public and private keuys that allow them to access their funds in the blockchain.&a;rdquo; Having an ecosystem that provides a convenient solution with minimal retainment of personally identifiable information as well as financial information is vital especially in recent months following the Equifax and Facebook data breaches.
&l;em&g;How Does A &a;lsquo;Mobile&a;rsquo; Hardware Wallet Work&l;/em&g;
I was curious as to the structure of Xeeda&a;rsquo;s &a;lsquo;truly mobile wallet&a;rsquo;, as there is no AC adapter and no ethernet or wired cables. Maloney walked me through their structure:
&l;strong&g;#1 &a;ndash; It Needs To Be Truly Mobile&l;/strong&g;
As we learned earlier when it comes to hot and cold wallets, for a truly mobile solution, users need to understand that if they are using a cold wallet for offline storage, then that device shouldn&a;rsquo;t have any potential to connect to the Internet or any third-party servers or services.
In other words, you won&a;rsquo;t find a battery or Wi-Fi enabled means to connect the device to the Internet. Both Maloney and Jackson told me that their device has no such battery or means in which it can be connected to the internet, because &a;ldquo;it&a;rsquo;s just not necessary and defeats the entire purpose of mobility and security.&a;rdquo;
&l;strong&g;# 2&a;mdash;Plug N&a;rsquo; Pin&l;/strong&g;
Upon connecting the device directly into the smartphone, the application still needs to verify that the user is the intended user connecting. Thus, the need to create and/or enter a pin is required. Again, this is something the user would need to write down, offline, in the event they forget it.
&l;strong&g;#3 &a;ndash;Master Key&l;/strong&g;
Like all cryptowallets out there, the user is required to set up a &a;ldquo;master key&a;rdquo; or catchphrase. Xeeda calls it &a;lsquo;master seeds&a;rsquo;, or sets of randomly generated words, which the user must write down and store in a safe place, offline. Typically, this would be in a safe or jewelry box.
Once the master seed or key is generated, you don&a;rsquo;t really need that again unless you lose the device&a;mdash;while these devices are intended to be shockproof and waterproof, they aren&a;rsquo;t safe as against you losing your key. Thus, you can still access your funds in the blockchain as long as you have the master seed.
&l;strong&g;#4 &a;ndash;Authentication&l;/strong&g;
When it comes to a user plugging the device into the phone, there still needs to be a way to ensure that the person connecting it to the phone, is the holder of the funds. Thus, Xeeda allows for &l;a href=&q;http://pr.report/dRbLmhPN&q; target=&q;_blank&q;&g;biometric scanners&l;/a&g; and authentication, via facial recognition or fingerprint scanning. This allows the holder of the funds to make the mobile application accessible to them and only them, regardless of who plugs the device in.
&l;strong&g;#5 &a;ndash;Start Trading&l;/strong&g;
From the application, you are able to pull down any/all supported currencies, coins, altcoins that you have from your cold wallet/storage and transact small amounts by selling/exchanging goods, or putting them into your hot wallet, which is connected to the Internet through an app.
As users of digital currencies become more mainstream, businesses need to find new, innovative ways in which to provide convenient and secure mobile access to these currencies and their users across the globe.
Platforms need to offer ways in which users can toggle between exchanges, coins, and fee structures that they are most intrigued by. Xeeda has identified this major issue and is already acting on the solution, providing users with a new, yet secure experience in how they invest and trade.
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