Choosing a wallet to store your crypto is one of the most crucial decisions you’ll have to make. That is why you must always extreme precautions and go with the most trusted, reputable, and straightforward companies.
Before we start, some things must be addressed; cryptocurrencies like Litecoin are not actually stored in the wallets. They are actually at addresses on the blockchain itself. The wallets only manage the private keys that grant access to the addresses where the coins are stored. Now that we have mentioned private keys, what exactly are private keys?
What are private and public keys/addresses?
To talk about private keys, we must also talk about public keys; we will be addressing both of them. Private and public keys (addresses) are the foundation of every blockchain network. When using cryptocurrencies like Litecoin, users are usually given a public address and a private key to send and receive their coins or tokens.
A private key is a highly sophisticated form of cryptography that allows a user to access their coins; it is usually a randomly generated alphanumeric address /number. They are fundamental to the safe-keeping of one’s coins. The public address is where the coins can be stored and received. And, although a user has coins deposited into his or her address, they won’t be able to withdraw them without the private key. The public key is created from the private key through a complicated mathematic algorithm. They are usually also an alphanumeric number. It is nearly impossible to reverse-engineer the process by generating a private key from a public key.
Private keys are used for making irreversible transactions on the blockchain. They are the key (pun intended) to spend your Litecoin or for you to be able to send them to anyone in the world. The irreversible transaction is ensured by mathematical signatures, which are linked to each transaction whenever the private key is used to move coins. Even though these signatures are unique for each transaction, they are generated from the same private key each time.
Needless to say, if you don’t own your private key, you don’t own your Litecoins. Furthermore, if a user were to lose their private keys, they would in turn also lose access to their coins. Now that we have covered these fundamental concepts, we may continue with our main topic: wallets.
Types of wallets
There are mainly two types of wallets: cold and hot wallets. Hot wallets are connected to the Internet while cold wallets aren’t. While these two categories are very general and englobe a variety of wallets, there is also another subgenre of wallet types: custodial and non-custodial (light wallet).
A custodial wallet is the one where your private keys are stored by a third party. Therefore, you don’t have complete control of your coins. Custodial wallets are very similar in their functions to the principles of a bank; the money isn’t entirely yours as it is in the hands of the company. However, these wallets have some characteristics that may make them more appealing, such as the chance of not losing your private keys and, therefore, access to your coins. You can quickly recover them through the entrusted company as they have full control of them.
Non-custodial wallets give you full control of your coins by providing you with your private keys. This is much more secure and decentralized than custodial wallets. It also comes with the responsibility of having to manage your private keys securely. If you would ever give someone else access or lose your access to the coins, you most certainly will not be ever seeing your coins again, as there is no possible way of recovering them. While this does sound frightening, you must only always take into consideration the responsibility of protecting your coins.
Now that we have cleared this, let’s go back to the two main categories:
Hot wallets are connected to the Internet, accessing coins stored in them is by far more accessible for everyday uses like day to day trading or payments. However, since they’re connected to the Internet, they’re also susceptible to Internet risks like hacking. There are exceptions for the rule with coins that are hot wallets but are still extremely secure; you just need to research each wallet’s strengths and weaknesses.
Examples of hot wallets include exchange wallets, web wallets, and desktop wallets; let’s go through all of them:
Exchange wallets are used to store the cryptocurrencies you recently bought, the ones you are trading, using to buy perhaps other cryptocurrencies or selling them. These wallets are not safe at all; you depend entirely on the exchanges wrong or right doing.
It is prevalent for new users to simply store the Litecoin they recently bought right there on the transaction rather than setting up their wallets. It is most common on exchanges that are for beginners or the ones that are much easier to use like Binance, SouthXchange or Coinbase. While this option is the most comfortable choice for storing your new Litecoins, it is not the safest one. Users risk losing their coins if a specific exchange gets shut down or hacked (which happened in the past, Mt. Gox, ahem).
While it’s true that the exchanges previously mentioned are amongst the most reliable and trusted ones, that doesn’t mean they are exempt from attacks or other unfortunate events like their unannounced closure. It is almost inevitable that you’ll have some coins in an exchange, whether that is for selling o trading purposes or even using them to buy other coins. In any case, you must always consider safety and maximize the security settings that are available for your account. Safety measures as two-factor authentication, email confirmation to enable withdrawals are still a must, including, of course, keeping the password to your account safe and with greater difficulty.
As clearly stated on the name, these online wallets are website-based, requiring users to have Internet access as well as a URL to access the wallet. It is widely prevalent for these wallets to implement some sort of account system, where the users have a username and password to login to the wallet. They are custodial wallets; you entrust a third party the safe-keeping of your coins.
Web wallets are straightforward to access and usually don’t require installing any software. Some of these wallets can have advanced features like buying and selling.
On the other hand, these wallets aren’t very secure since they are accessed through a web browser, which is vulnerable to hacks and several exploits, while also being hosted on a centralized server. Web wallets also don’t give you control of your private keys or recovery phrase, meaning that you don’t control your coins and are entrusting them to someone else to hold them safely.
Some examples of web wallets that are Litecoin-compatible include:
- Guarda: is a lightweight non-custodial cryptocurrency storage. It supports the most popular coins and their tokens, including Litecoin, BTC, DASH, ETH, Ethereum-based tokens, and more. All the currencies can be purchased within the wallet with a bank card. The wallet is also cross-platform and is available on the web, desktop, and mobile versions.Some of the wallet features include; receiving and sending, transaction history, built-in exchange, fiat purchases, importing and exporting private keys, wallet backup, secure encryption algorithm, and more. The Web wallet is handled from any device that is connected to the Internet. Guarda always focuses on the reliability and safety of their products, so top security notions are implemented in Guarda Web wallets. All Guarda wallets are non-custodial, and the company does not store the user’s data or private keys. The private key holder is the only person able to manage the savings. Creating a Guarda Web wallet is simple. Even more so, importing an existing wallet into Guarda is possible with the use of a backup and private key.
- LiteVault: a secure online Litecoin web wallet that uses encrypted wallets and in-browser cryptography to deliver a trustless service, all user wallets are encrypted before they reach the provider’s servers, which in turn, allows you to retain control of your private keys. The service is fast and easy to use and has a free sign up process, which takes not more than 10 seconds. LiteVault’s source code is publicly available. This is specifically Litecoin compatible crypto wallet, which doesn’t support any other cryptocurrencies apart from LTC.
- Coinsbank: is an all-in-one cryptocurrency platform that includes crypto wallet support, among other services. The app is a portfolio manager, which is used to make cryptocurrency payments and transfer funds to other users. It has an automated trading function. It allows you to keep the complete list of transactions with all the detailed information. The built-in exchange allows coins to be instantly exchanged between currencies at the market rate. Customers have full control over the security of their coins from the app or their online account. The wallet has two-factor authentication that ensures the safety of your coins.
Comparison of each wallet
Mobile wallets are exactly what they sound like, mobile phone applications to store your coins. These wallets are very convenient to use because, in most cases, all you need to do is download the app and transfer your coins to the wallet. This, in turn, allows users to be available to access their coins from anywhere and anytime, with, of course, an Internet connection
While their main feature is the convenience of use as you check the balance in the app or transfer your coins on the go. It is especially useful for making in-person payments to merchants that accept crypto. Many mobile wallets have increasingly evolved and offer a wider variety of features like a built-in exchange or support to other exchanges allowing users to make instant trades on the app. Other features include the ability to buy gift cards or, if the app supports it, the ability to load debit cards to spend crypto on real-world goods and services.
On the mobile realm of wallets, each wallet has different types of managing your private keys and crypto; some wallets are custodial while others are non-custodial. Most mobile wallets provide full access to your private keys and recovery phrases, which gives you complete control of your coins, these wallets being non-custodial.
Many people tend to associate mobile wallets to not being very secure, but there are exceptions to the rule. Some mobile wallets support hardware wallets (we’ll get into that later) like Trezor. They are thus making the storage of coins far more secure.
Although some apps indeed have internet-based risks based on each user’s security practices as well as the possibility of someone stealing or hacking your phone and in someway access the app and take your coins, again, this all depends on how each and everyone handles security on their own.
Some examples of mobile wallets that are Litecoin-compatible include:
- PolisPay: a non-custodial, decentralized, multi-currency digital wallet. The app is cross-platform: iOS, Android, Windows, and macOS. PolisPay allows its users to send, receive, store, spend, and exchange cryptocurrencies without leaving the app. Users can buy gift cards with their cryptocurrencies or turn them into fiat using the PolisPay card. Additional features include the ability to exchange instantly between cryptocurrencies with their Shift services.The PolisPay app values security; that is why they have full compatibility with BIP39 (Mnemonic Phrases) BIP32 (HD Wallets) and hardware wallets (Trezor). The private keys are secured with on-device storage; no data gets into their servers. This is a genuinely non-custodial wallet; you are in total control of your assets.All of the features that the app offers are usually scattered through a variety of apps, PolisPay has the convenience of having everything jammed up in one single app.
- Trust wallet: an extremely fast and secure multi-crypto wallet designed for mobile users, both iOS and Android, allowing them to send, receive, and store their coins. Trust wallet is a non-custodial wallet where your private keys are only stored locally and protected with many layers of security. Users have access to a Binance DEX exchange and staking services. They have partnered with Binance and Kyber network in terms of offering exchange services. They have also integrated a Web3 browser, which facilitates interactions with decentralized applications directly from the app.
- Coinomi: a security-first, multi-chain wallet for both mobile and desktop that has been around since 2014. The wallet provides the chance to purchase cryptocurrencies in the app with their partners SimpleX using a credit or debit card. Other features include the ability to almost instantly exchange coins thanks to the partnership with the ShapeShift service, which is known for its user-friendly interface and transaction speed.The app doesn’t save private keys on their servers, meaning that they are non-custodial. Instead, they are stored on the user’s device. With BIP44 logic, it enables you to keep everything secure and accessible through a passphrase that only you will know.
Comparison of each wallet
Desktop wallets are a category within the hot wallets. And as the name states, they built to be downloaded and installed on your PC, laptop, with support for Windows, Mac, Linux, and others. Desktop wallets are by far one of the most popular wallets right now; this is due to the wide variety of features that they offer.
The advantage of desktop wallets its that they are usually much more developed and offer more features than other wallets. These features include a bigger list of supported assets, built-in exchanges, portfolio charts, a marketplace, ability to use your Litecoin to buy gift cards or other services.
Like other hot wallets, they are exposed to the dangers that come to been connected to the Internet. The wallets are also vulnerable to hacking attempts to our computers. Nonetheless, as continuously mentioned in this post, this all depends on the user and the security practices they maintain.
The desktop wallets category also includes wallets like Litecoin Core wallets alongside other wallets that aren’t necessarily developed by a specific cryptocurrency. Some examples of desktop wallets that are Litecoin-compatible include:
- PolisPay: a non-custodial, decentralized, multi-currency digital wallet. The app is cross-platform: iOS, Android, Windows, and macOS. The app allows users to send, receive, store, spend, and exchange cryptocurrencies. Users can buy gift cards with their cryptocurrencies or turn them into fiat using the PolisPay card. Additional features include the ability to exchange instantly between cryptocurrencies with their Shift services.The PolisPay app values security; that is why they have full compatibility with BIP39 (Mnemonic Phrases) BIP32 (HD Wallets) and hardware wallets (Trezor). The private keys are secured with on-device storage; no data gets into their servers. This is a genuinely non-custodial wallet; you are in total control of your assets.All of the features that the app offers are usually scattered through a variety of apps, PolisPay has the convenience of having everything jammed up in one single app.
- Exodus: a very well designed, multi-currency desktop wallet which has support for more than a 110 cryptocurrencies. The desktop wallet was designed to be easy to use, giving you a way to secure, manage, and exchange your cryptocurrencies right within the app. Exodus encrypts private keys and transaction data on your device and for your eyes only. Your data remains private – no registration or account setup required. Bringing security to the next level, Exodus has Trezor support. They also provide its users with a one-click recovery system to restore a wallet with a 12-word recovery phrase.
- Atomic: a fully decentralized, non-custodial multicurrency wallet, supporting Litecoin and 300+ coins and tokens. Atomic provides an interface that allows you to not only manage but also exchange and buy cryptocurrencies with a built-in exchange engine powered by Changelly. Also, you can easily buy LTC with a bank card right within the app.The wallet has a built-in decentralized order book enabling users to exchange BTC, LTC, and QTUM using the Atomic Swap technology. Atomic Wallet provides users with a 12-word mnemonic seed, so they get full access to their funds. All private keys are encrypted on an end device.
On the other hand, cold wallets are not connected to the Internet, which in turn makes it harder to access the coins quickly. Not being connected to the Internet also means that they are less susceptible to hacking or other individual trying to steal your coins. Usually, the coins stored on a cold wallet are ones that you won’t be frequently moving or HODLING. Again, there are exceptions to the rule; not all cold wallets are completely secure.
Examples of cold wallets include hardware wallets and paper wallets; let’s go through all of them:
Hardware wallets are specially designed physical devices where you can store the private keys to your Litecoins offline. They are considered the best and safest option for storing one’s cryptocurrencies. These devices are connected to your PC or laptop via USB ports. For users to be able to perform tasks like sending and receiving coins, they must be connected and approve or sign the transactions from the device itself.
These wallets have advanced security features; the private keys never leave the hardware wallet, protecting them from several Internet-related risks like malware or hackers. Some wallets on the market are both safe and durable, but often pay the price of decreased user-friendliness and limited features. On the other hand, there are intuitive and straightforward to use wallets, but with elements that might pose a security risk.
It is essential to understand that hardware wallets aren’t exactly perfect and still have some security risks associated with them. There are several realistic ways in which a hardware wallet can fail to protect your Litecoin. These risks need to be carefully considered when deciding how much trust you’ll place in a hardware wallet and its company.
Some examples of hardware wallets that are Litecoin-compatible include:
- Trezor: a hardware wallet that provides advanced and secure cold storage for cryptocurrency private keys and the ability to spend with the convenience of a hot wallet. Your entire wallet is always accessible via your personal 12 to 24 words long recovery seed, if you would ever lose your physical device.Some wallets on the market are both safe and durable, but often pay the price of decreased user-friendliness and limited features. On the other hand, there are intuitive and straightforward to use wallets, but with elements that might pose a security risk. Trezor provides the features that you expect from a hardware wallet: security, usability, and support for your favorite cryptocurrencies. The company offers two models: Model T and Model One.Trezor wallet must be connected to the computer for users to move coins that they have stored in there. The wallet connects to the computer through a cable, which can be a bit of a downside.
- Ledger: a hardware multicurrency wallet that provides secure cold storage for cryptocurrency private keys. They are device-based, meaning they use storage mechanisms such as USB drives to store private keys, thereby making it difficult for hackers to access the key from online. Your entire wallet is always accessible via your personal 24 words long recovery phrase if you would ever lose your physical device. The company offers two models: Nano S and Nano X. Ledger wallet must be connected to the computer for users to move coins that they have stored in there. The wallet works like a USB to connect to the computer, although one of the models, Nano X, offers Bluetooth support.
Comparison of each wallet
No, you are not reading it wrong, paper wallets are a thing. Yes, you can store your Litecoin on non-digital ol’ reliable paper. These wallets, as you might have guessed, aren’t connected to the Internet (duh) and aren’t exposed to the dangers that come with the Internet. Paper wallets can be used to store your Litecoin for the long-term or for giving them as gifts (now you have an idea for the next birthday you have). While paper seems to be safer as it is not connected to the Internet, somebody can steal that piece of paper and take your coins.
The way these wallets work is by having a single private key and Litecoin address, usually generated from a website, printed out on paper. The keys are typically printed in the form of QR codes, which you can scan in the for future transactions. Some significant downsides are, of course, that they make your coins not very accessible for everyday use like hot wallets offer.
Paper wallets should not be mistaken with seed phrases, which are much safer as they are 12 or 24 random words generated to access or recover coins. Examples of services that allow users to create their paper wallet for Litecoin are:
- Liteaddress.org: a straightforward service enables users to create a Litecoin key and address for them to print and securely store them.
- WalletGenerator.net: also, a straightforward service allows users to create a Litecoin key and address for them to print and securely store them.