During the protests in Canada, the authorities blocked the accounts of striking truckers. A heated discussion has begun in the cryptocurrency community about how to store funds.
In Canada, protests against covid restrictions have not subsided for several weeks. Angry truckers block large streets and bridges with their towing vehicles. Protestants do not agree with the mandatory vaccinations for truck drivers crossing the border with the United States. The authorities introduced a state of emergency in the city and began to block the bank accounts and cryptocurrency wallets of the protesters.
Jesse Powell, CEO of the Kraken cryptocurrency exchange, criticized the actions of the Canadian police on his Twitter account. He confirmed to his followers that exchanges are forced to block user accounts at the request of the authorities, even without a court order. After that, a discussion began on the social network. It turned out that users who store their funds on the wallets of centralized exchanges, such as Binance, Kucoin, Kraken, Huobi and others, did not realize that their funds could be blocked. In another Twitter thread, that fact was indirectly confirmed by the head of Binance, Changpeng Zhao.
The surprise of the majority is understandable - crypto-enthusiasts are used to believing that the state cannot have access to cryptocurrency accounts on exchanges. Read more about alternative ways to store crypto in the article.
What is the difference between custodial and non-custodial wallets
Custodial wallet – stores user private keys on its side and is responsible for their backup and security. To put it simply, it looks like Internet banking. The bank gives you access to your funds, but may control them.
A non-custodial wallet is a decentralized wallet that transfers secret access keys to the user at the time of creation. Decentralized means that there is no organization that manages this wallet. It's like a safe in your house, only you control what's inside.
Hardware wallets are also classified as non-custodial - they are also called “cold wallets”. These are devices, like a flash drive. The main difference is that wallet does not have direct access to the Internet and cannot be hacked from the outside. If we continue the safe metaphor – the cold wallet is a safe with a strong level of protection.
The Ledger Nano S cold wallet can be synchronized with software wallets. Source: shop.ledger.com
Which wallet to choose for storing cryptocurrencies
Now there are many non-custodial services on the market that can store user funds. They differ in the number of coins and blockchain networks they support. May have an app for a mobile device or provide access through browser extensions. In general, they have approximately the same functionality. I'll tell you more about three of them.
Metamask is one of the most popular wallets
It's easy to set up and start using. You can install it on your computer as an extension for Chrome and Firefox browsers, or download the application from the Apple and Google app stores. Private keys will be stored on the device. At the time of registration, the system will offer to save a special seed phrase, which will allow you to restore access if the key is lost. The wallet supports the Ethereum blockchain and all tokens created on its basis. With this wallet, you can send and receive cryptocurrency, buy it with a card, add new tokens to your list, store NFTs. In addition to Ethereum, Metamask can be configured to support Smart Chain BNB, Polygon, and other networks.
Trust Wallet – wallet from the Binance exchange
The head of Binance did not just admit that he keeps his funds on Trust Wallet. The exchange bought the service in 2018. The wallet is only available on mobile platforms – you can download the app from the official Apple, Google and Android stores. Trust Wallet is popular with users for its multicurrency. It supports a huge number of blockchains - 53. This is about 1 million coins. The service is decentralized and does not store the data of its users. However, affiliation with the exchange raises questions among some crypto enthusiasts.
Trust Wallet supports NFT on Ethereum and Smartchain BNB networks. Source: trustwallet.com
Phantom – Solana Blockchain Wallet
The solana blockchain is getting more and more popular. The reasons are it is faster than Ethereum and transactions are cheaper. Therefore, even with the support of one network, the wallet is in demand. With Phantom, you can buy and sell coins, receive them from other users, exchange tokens on decentralized exchanges, and store NFTs. For today the wallet is available only in the Apple Store, but it has extensions in Chrome, Firefox, Edge and Brave browsers. Phantom can be synced with a cold Ledger wallet.
Ledger and Trezor are the most popular hardware wallets
It is safer to store large funds in cold wallets. For example, Ledger Nano S allows you to store more than 30 popular cryptocurrencies – Bitcoin, Ethereum, USDT, Binance Coin and others. It is suitable for storing NFTs. The wallet is used together with the Ledger Live app. The Trezor wallet works not only with popular, but also with rare coins - the total list reaches 600. Both devices are safe, not susceptible to viruses, even if they are on the computer. If the user has lost the device, access to the assets can be restored using the seed phrase. The cost of devices starts from 60 USD.
Which wallet is better – depends on the situation
There is no consensus on this issue among market experts. Some investors continue to choose centralized services to store their funds. Some – trusts only non-custodial wallets. Choose the storage method that is convenient for you. Remember about security, regularly update your antivirus and do not forget that “not your keys – not your crypto”.