As cryptocurrencies don’t exist in physical form, a crypto-wallet must be acquired to securely store your Litecoins. A crypto-wallet interface could be compared to an email client. There is a wide range of wallets available, enabling users to send, receive and store their digital money. Users should be advised to protect their accounts with a high-security password, as well as to always keep a back up of their wallet to an offline storage.
When selecting a wallet, a user must take into consideration the purpose of use for his digital currency. If a user aims to use his Litecoins for daily payments would, therefore, need easy access to the funds. In such case he would have to choose an online wallet, sacrificing a level of security for accessibility. If the user’s goal is to speculate from the coin’s price appreciation in the open market, an offline wallet would suit his needs better.
Types Of Litecoin Wallets
The easiest way to store your Litecoins, yet the least secure. Users rely on a third-party to hold their assets, frequently in an unregulated environment. Funds can be vulnerable to confiscation by an authority (in case the exchange is not legally compliant) and exposed to malicious attacks. Several examples are the Mt.Gox and Coincheck exchanges, that suffered by hackers with investors losing their funds.
The most commonly used wallets. An executable computer or mobile application, from which the user can directly execute transactions using his Litecoins. Desktop wallets are divided into two categories. A user can run a full node that requires the download of the whole blockchain, a record with all the history of Litecoin transactions. While this option provides increased security to the user and the network, Litecoin’s blockchain size is currently about 17GB and constantly growing.
Alternatively, users have the option to connect to other peers and save storage space, however, their transactions would be visible and potentially vulnerable to wrongdoers. This option is the only available for mobile wallets due to their limited storage capabilities, but convenient for executing micropayments at the same time.
Every wallet (as the above) connected to the Internet is also called a hot wallet. The wallets mentioned below, offer maximized security as they are offline and called cold wallets.
The two main manufacturers of such wallets are Trezor and Ledger. They produce USB-like devices that can cryptographically lock and protect Litecoins. While they offer maximum security by holding your digital assets offline, they are prone to theft and physical damages. Both companies offer password retrieve abilities of forgotten passwords.
By using an online address generator, Litecoin holders can print out the details on paper. This is the most secure way to protect your Litecoins, but similar to other hardware wallets a paper can be easily destroyed or lost, and the account cannot be recovered if the password protecting the wallet is forgotten.