When we think about cryptocurrencies, there’s an old saying: “Not your keys, not your coin.” This means that if you store your tokens on an exchange or any platform where you don’t have full control, those tokens are technically not yours and remain vulnerable to whatever happens at their storage location. However, there is a solution: crypto wallets. These wallets come in all shapes and sizes.
Crypto wallets are primarily available in two forms: offline and online. If you’re involved in DeFi and Web3, you’ll likely need a multi-signature wallet that can connect to different decentralized applications (dApps) on Layer-1 blockchains like Ethereum or Solana, or Layer-2 solutions like Arbitrum or Base. While there are countless wallets to choose from, one aspect that isn’t discussed enough is their security.
Today, we’ll examine what you should look for in a DeFi or Web3 wallet regarding security, and why this should matter when choosing one wallet over another. Some concerns will be obvious, but others might be more troubling than you think.
Major Security Concerns
Hacks
This is the most obvious concern. Nobody wants to get hacked! Unless you’re a penetration tester or experimenting, most people don’t want protocols or strangers accessing their accounts and stealing their funds. Unfortunately, this happens daily in the crypto world. Whether it’s code bugs, protocol exploits, or plain human error, your wallet’s security is always at risk depending on your activities.
Privacy
Contrary to popular belief about blockchain anonymity, all blockchain transactions are recorded. While some are obscured, they can still be tracked with sufficient resources. Some wallets can access your location, enable online tracking, and even gain access to other applications unrelated to your wallet’s purpose.
Access Control
When you access a Web3 or DeFi application, you sign in through your wallet, which then displays what permissions that application requests. For example, if you visit Dbank (a Web3 dApp), it might track how much crypto you hold, where your assets are staked, and your earnings. Before this happens, you must grant permission, and your wallet should clearly explain what you’re authorizing.
A good wallet should also revoke these permissions if an application shuts down or if you haven’t accessed it for an extended period. If these features aren’t available, you risk being hacked and having your funds drained.
What to Look for in a Wallet
There isn’t one perfect answer, but overall, you should seek a wallet that is as transparent as possible. Look for something user-friendly that provides the access you need across multiple devices (mobile, PC, tablets, etc.). In DeFi and Web3, speed is crucial—the faster the process, the better. Due to token volatility, you need to understand what you’re getting into, so your wallet should be responsive and provide detailed information about your transactions and their safety features.
How to Check Which Wallet is Safe
You can research this in many ways online. I recommend checking the Wallet Security Ranking on Coinspect, which provides an excellent overview of online wallets available for browsers or mobile devices. While it primarily focuses on Ethereum (the leader in dApps by far), many wallets support multiple protocols, including other Layer-1 blockchains like Solana and Avalanche, as well as Layer-2 solutions connected to Ethereum.
Their ranking considers the following factors:
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dApp Permissions: How well the wallet manages application access
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Intent Verification: Confirmation processes for transactions
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Physical Access: Security against unauthorized device access
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Threat Prevention: Protection against various attack vectors
You can click here to find the report.
This ranking system offers a visual way to compare wallets. While other sources exist, make sure to visit the wallet developer’s page and FAQ section to understand key aspects of their software.
Having a secure wallet provides access to the DeFi and Web3 world, allowing you to learn, explore, and protect your assets. We’ll soon publish an article about offline and physical crypto wallets, but for now, explore carefully and be cautious with the dApps you interact with. Remember: your wallet’s security is your responsibility, so choose wisely.
Source: Coinspect.com
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