As a reminder, hot wallets are interfaces for interacting with an address in blockchain that are permanently connected to the internet. This means that they store private keys, so users can quickly sign a transaction and make it happen.

The main risk here is precisely the presence of an internet connection, as it can be and is used by hackers. In this case it is much safer to use so-called cold wallets, which are not connected to the internet.

Earlier advice on storing digital assets was shared by the creator of Etherium, Vitalik Buterin. His advice centered around the topic of sharing access to an address among multiple people. And as Vitalik believes, ideally they should not know each other.

In this way, Buterin again supported projects with a so-called social recovery function. Read more about the topic in a separate article.

How to store cryptocurrencies properly

According to CryptoSlate sources, the survey was conducted from December 2022 to January 2023 and involved 421 investors. However, it is unclear exactly what proportion of respondents use multiple methods of storing cryptocurrencies at once.

The fact that users are storing coins on exchanges looks particularly bad in the context of the FTX crypto-exchange bankruptcy. Here’s how CoinGecko analysts comment.

Most cryptocurrency holders still depend on centralised exchanges to exchange traditional currencies for crypto, as well as to buy and sell digital assets. Therefore, investors still prioritise convenience over security.

It is fair to say that decentralised exchanges are becoming more popular now, though. In particular, the ratio of trading volumes on decentralized crypto exchanges to those of centralized platforms is now at an all-time high. We are talking about 20 percent, which means that decentralised platforms account for one-fifth of all trading on centralised platforms like Binance. And that is a good trend, because decentralised exchanges do not require funds to be stored in third-party wallets, as is the case with centralised platforms.

This is a really tricky trap for customers of cryptocurrency exchanges. For example, an account on Binance can be funded in minutes with funds directly from a bank card. Other major trading platforms provide similar services. For most people, this is easier than dealing with the variety of cryptocurrencies and learning about storing private keys.

However, this is self-defeating; well, storing crypto in your own cold wallet greatly reduces the risk of losing assets. The cold wallet itself is a carrier of private keys that is completely isolated from the internet. Accordingly, it conducts the signature of the desired transactions outside of the online world, which, among other things, protects the important combination from hackers.

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Cold wallets have one disadvantage – they’re not as convenient for holding funds that an investor uses often. In that case you need to use a hot wallet, and one of the most popular solutions in this area is MetaMask.

The day before, the MetaMask team launched a new feature – authorization on third-party web services by wallet address. It became a reality thanks to the integration of the EIP-4361 standard, designed to develop a unified framework for the wallet’s interaction with third-party platforms.

In other words, owners of blockchain wallets will use them to authorise to various services, rather than Google, Apple, Facebook and other accounts.

With EIP-4361 wallet users will be able to sign the standard message format for logging in to third party web services. Supported platforms will display a pop-up window for viewing details, including site name, session details and security mechanisms, as well as verifying the correct domain name to protect against unauthorised access.

Here’s a post from the official MetaMask account about the release. A related retort is cited by The Block.

This is part of our ongoing effort to make authentication a simpler process for our community. Our implementation also offers a ‘domain-linking’ feature that detects signatures and confirmations from malicious URLs.

Websites usually rely on large technology companies for authorisation. It has long been common practice not even to specify a username and password for individual accounts, but simply to log in immediately using Google, Facebook or another platform.

It’s also worth noting that MetaMask is not the first wallet to adopt such security standards. In February, the Phantom platform also added an ERC-4361 equivalent on the Solana blockchain.


The results of the CoinGecko platform's survey suggest that cryptocurrency owners often put convenience ahead of coin security and ownership. This is a bad trend, as sooner or later projects like FTX and Celsius go bust, resulting in billions of dollars in losses. So in this case, opting for a hardware wallet and decentralised exchange is also an opportunity to keep your crypto safe for the long term. It really is worth the effort and the extra effort.


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