Manage your cryptocurrency yourself

3. August 2021Text: Tamara Tiefenauer | Media: Redact

If you want to understand and use digital assets like cryptocurrencies, there’s no getting around “wallets”, which provide direct and secure access to digital money. But not all wallets offer the same protection.

Have you ever considered carrying all of your assets around with you? This is hardly imaginable for physical assets such as cash, gold and securities. After all, who wants to walk around rolling a safe behind them? That would be neither secure nor practical. However, the situation is somewhat different in the world of digital assets: blockchain technology already makes it possible for you to keep your assets secure and mobile. And in contrast to conventional e-banking, third parties are not required for safekeeping your assets. The advantage here is that you don’t have to go through a financial institution, so there are no fees and you have full control over your assets.

A wallet as a safe

BitBox02 wallet

With BitBox02, you benefit from secure and direct access to your cryptocurrencies. Swisscom is now offering you 10% off every BitBox02. To do so, enter the promo code “SWISSCOM” when ordering.

To the offer

If you wish to hold digital assets such as cryptocurrencies, you need a public address based on a public key. For this address, users first have to generate a secret key, known as a private key. The public address is visible to everyone in the blockchain and can be used to receive transactions. The key behind each address, on the other hand, is secret and should only be known to the owner. This is because it can be used to authorise transactions to send the assets. A secure wallet is needed to generate this important key and protect it from unauthorised access.

A wallet is like a tool with which you store the access keys for your digital assets. There are two different types of wallets:

Hot wallets are connected to the internet or run directly on a device with internet access.
Cold wallets are not connected to the internet and store keys offline.

Desktop wallet (hot wallet): The access keys for your digital assets are stored on your computer. These wallets usually offer very comprehensive options, but you generally need an internet connection to use them. This makes the keys vulnerable to hacker attacks.

Mobile wallet (hot wallet): The access keys for your digital assets are stored on your smartphone. These wallets are usually easy to use and can also be accessed on the go. However, there is a risk of losing your smartphone and, with it, access to your assets. In addition, the keys are almost always online and therefore vulnerable to hacker attacks.

Online wallet (hot wallet): The access keys for your digital assets are stored on a server. You can access your account by logging on to a website. However, the owner of the platform often has access to the keys, too, and not just the user. The latter can access an overview of their assets, but does not have full control. Their digital assets are effectively managed by third parties. Moreover, such sites are not safe from hacker attacks.

Paper wallet (cold wallet): The access keys for your digital assets are simply written down on paper. This is not without risk. For example, you should never send the respective form by email or save it to your computer. And when printing out your keys, the rule is: if possible, use a device that has no internal memory or internet access. Because these are the ways that access keys may fall into the wrong hands.

Hardware wallet (cold wallet): The access keys for your digital assets are generated and stored on a type of USB stick. Special hardware is used which completely shields the keys stored on it from the outside. Even virus-infected computers and smartphones are therefore not a danger.

Full control over digital assets

A good wallet cuts out the middleman. Users have direct access to their assets and can, for example, buy and sell cryptocurrencies. With such independent control, assets can be accessed around the clock. In addition, a wallet reduces vulnerability to fraud. “The ability to take self-custody of your blockchain-based assets is one of the biggest unique selling points of wallets,” says Douglas Bakkum, CEO of Shift Crypto. “And our goal is to make digital asset self-custody as secure and easy as possible.”

With BitBox02, Shift Crypto AG is offering one of the leading hardware wallets on the market. The device, which is about the size of a USB stick, has been developed in Switzerland and is compatible with all Android smartphones as well as laptops and computers. The access keys kept in the wallet are generated by the user and stored completely offline. This offers a particularly high level of security against attacks from the internet. Douglas Bakkum says: “With self-custody, clients can access their digital assets much more directly. This opens up new opportunities for sourcing financial services.”

Swisscom is also convinced of this and is encouraging Shift Crypto’s innovation potential. Aetienne Sardon, FinTech Innovation Manager at Swisscom, says: “Shift Crypto is one of the most experienced hardware wallet providers on the market. The company is a great example of a world-leading digital asset start-up from Switzerland.” In addition, blockchain-based assets are increasing and a decentralised financial system is gradually developing. Together with Shift Crypto, Swisscom therefore wants to offer its customers the chance to benefit from this innovation right now.

Shift Crypto AG – Swiss pioneers

Shift Crypto AG is a private company based in the canton of Zurich. An international team of specialists in the fields of hardware technology and cryptography builds its BitBox hardware wallets. One of the founders is also part of Bitcoin’s core development team. In addition, the company offers advisory services. BitBox02 is a second-generation hardware wallet. It allows private individuals to store access keys to cryptocurrencies and carry out transactions in a simple and secure way.

Glossary

Cryptocurrency

Unlike traditional money, cryptocurrencies like Bitcoin run without third parties. Cryptographic procedures and an open network of globally distributed computers ensure the security and integrity of these currencies.

Blockchain

Transactions are recorded in a blockchain, rather than a central account book. The blockchain stores the transaction history continuously in successive blocks. An open network of globally distributed computers verifies and stores each new block. For a transaction to be included in a block, it must first be sent to the network. The network then verifies whether this transaction is permitted and should be included in the next block and thus recognised as valid. The system compensates the computers for this work with what are known as mining and staking rewards.

The advantage of this system is its robustness, because there is no “single point of failure”. That means there is no central entity that controls and thus could manipulate the transaction history. Instead, the network updates the transaction history collectively. Individuals can therefore no longer make changes to it in retrospect.