The importance and method of wallet classification

In a decentralized world, wallet tiering is a very important concept.

In different situations, you may need different security levels. For example, when you are working on some very new projects, you may not have time to judge whether it is safe enough? Is its contract safe and trustworthy? Will it secretly use other tokens or assets in your wallet? Or when you have a large portion of your assets stored in cryptocurrencies, you may need a wallet to store these unbearable positions.

Generally, the wallets we use can be divided into two types, namely cold wallets and hot wallets.

Hot wallet refers to the general wallet app. For example Matamask or some decentralized wallets connected with wallet connect. These wallets are always connected to the Internet, and their risk of being stolen is relatively high, because the private key may be stored in your computer or mobile device, or even in the cloud, and as long as there is a way to steal your password or your device storage There is a way to steal your wallet by taking the right.

The cold wallet is a physical device to store the private key. All actions must be performed through physical buttons on that device. This also means that a hacker cannot use the assets in your wallet by stealing your computer or mobile device, because he has no way to touch your physical buttons.

This greatly increases asset security.

But all wallets have a common feature, that is, as long as your mnemonic or private key is stolen, your assets will be stolen.

The way to avoid theft while noting is to store it securely. The most common mistakes are taking a photo with your phone , storing the mnemonic in your phone, or you type it down and store it on your computer or any cloud device, which is a very high-risk practice.

No matter what system your device uses (IOS, Android, Windows…), it has vulnerabilities.

The only safe way is to write the mnemonic phrase on a piece of paper or a metal plate and store it in a safe place. Safer methods include adding an extra layer of encryption or using a mnemonic board and splitting it into two separate copies.

In most cases, we will need at least two hot wallets and one cold wallet. The hot wallet is very convenient to obtain, as long as you open the app, you can get a new hot wallet, while the cold wallet needs to be purchased additionally. Don't feel bad about the expense, because that little money is nothing compared to the assets you'll put in it later. The function of the hot wallet is to allow us to store some assets that we usually need to interact with other contracts. For example, related to games, we may often need transactions, or some wallets used to interact with high-risk projects.

Therefore, the purpose of dividing the hot wallet into two is to grade the asset risk again. One is a wallet dedicated to taking the highest risk: this wallet can only hold a small amount of ether, or other assets, so that you can control the loss when you are stolen; the other hot wallet is to store Some assets that more often need to interact with contracts whose security has been time-tested.

Cold wallets are used to store your most important assets. In most cases, this wallet should not interact with other contracts, and it is in a situation of only entering and not entering.

If you only plan to have a cold wallet, I would recommend ledger as it is the most compatible (but it is really cumbersome and hard to use). You can also choose any hardware wallet that Matamask supports. Because the compatibility of cold wallets is relatively poor, if you buy a label with insufficient support today, you will find that your wallet cannot be used in many cases.

When choosing a cold wallet, it is best to buy two at a time. As long as the mnemonic of the cold wallet is exported to any wallet app, it will change from a cold wallet to a hot wallet, and the security of the cold wallet will be lost. Having a second cold wallet is to allow you to use your assets when the first cold wallet fails (SecuX's touch screen operation is very convenient, and the function of seeing NFT images is also very cool).

Establishing a correct wallet risk classification concept can avoid the risk of theft to the greatest extent. The later this tier is established, the more time and gas fees you will waste migrating assets in the future.