In this chapter you will learn how to choose the best Litecoin wallet for your particular wants and needs.
The first step before you want to buy Litecoin is to decide on how you’re going to store your litecoin and wallet you will need.
Firstly, you’re probably going to ask yourself … a wallet? Why would a digital currency such as litecoin need a wallet? Storing your Litecoin in a personal wallet is probably the safest way to use and store your currency. We would strongly advised to transfer your Litecoins directly to a wallet after you have purchased them from a trading platform. If you choose to leave your Litecoin with a platform you always run the risk that the platform goes bankrupt, offline or that it is hacked. Which means that you have lost your Litecoins forever.
Of course, the chance of this happening is very small, but it’s not much of a problem to set up a wallet. So there should be no excuse for not having your own wallet for your valuable litecoins.
What is a Litecoin wallet
A Litecoin wallet is a digital wallet for your Litecoins (funnily enough!). Just like Litecoin are a digital form of physical money, much like money in a bank account, a Litecoin wallet is a digital translation of a physical wallet.
In a Litecoin wallet you can create and manage Litecoin addresses. A Litecoin address is similar to a bank account number that you would receive from your bank. But as we discussed in chapter one Litecoin does not have a central manager (so in this case a bank) that does that for you! So you can make addresses yourself, that is all in contrast to your bank, free of charge. You can also make as many addresses as you want!
A Litecoin address consists of a private key and a public key that both contain a series of numbers and letters. And they look like this: “1KV2ybMT5vUmEepogj5F75si1ob455zade” . The public key is what you give to a person or organisation that you want to receive Litecoins from. The private key is what you use to send / spend Litecoins. It’s important that you ensure that your private key is always safe and not visible to others.
The way this works is almost identical to how you would do it with a traditional bank account. The only difference is that you have two special addresses for sending or receiving Litecoins. If you want to receive Litecoins, all you have to do is give your public key to the person in question. A nice extra in terms of technology is that you can often make payment by sending or scanning a QR-CODE to perform these actions.
Types of Litecoin wallets
There are 5 types of Litecoin wallets to choose from, and you can certainly be a bit overwhelmed when you first step into the world of Cryptocurrency. But do not worry, that’s what this guide’s for! So let’s look at what you can choose from:
‘Cold’ and ‘Hot’ Litecoin wallets
Before we dive into which types of wallets are available to choose from. It’s wise to explain what is meant by ‘cold storage’ and ‘hot storage’ when we talk about Litecoin wallets. These are terms that you will often encounter while you’re making your decision!
All types of Litecoin wallets can always be classified in Hot or Cold wallets.
Cold Litecoin wallets
Cold Litecoin wallets are physical wallets that are not connected to the internet. You usually have the currency in your hands, in the form of a USB stick, for example. As a result, this way of storage is often considered safer.
Cold storage is more suitable for the long-term holders of litecoin that will not be invested for a long time. Similar to a savings account!
Hardware Litecoin wallets are the safest way to store your Litecoins. A hardware wallet is a small computer or smart card that is specifically built for generating Litecoins private keys offline.
HARDWARE LITECOIN WALLETS
Hardware wallets are a form of cold storage and are the best way to store your litecoins for an extended period. We would strongly recommend that if you own a large amount of litecoins, that you can transfer your balance to a cold storage.
Hardware litecoin wallets are aimed at litecoin owners who want to store a large quantity of litecoin for a long term period. Hardware Litecoins wallets also do not require you to trust in a third party, which is the case with almost all other wallets!
Because of the popularity of these types of wallets and that of litecoin, there are more and more options every year when it comes to these types of wallets. At the moment, however, there are 3 wallets that are clearly performing the best, and are therefore the most popular with litecoin holders.
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PAPER LITECOIN WALLETS
If you are not a fan of all that technology, then it’s also possible to go for the old-fashioned paper storage as a wallet. Just like a hardware wallet, this is a safe offline method of storage, and you can print a paper wallet yourself at home!
The operation of a paper wallet is fairly simple. You create a paper wallet by going to a website . These types of websites offer you the option to generate a paper wallet with your own private and public key and their respective QR code. You can then download and print it!
You can use the public key (or the QR code) to set up Litecoin, or the private key to extract Litecoin from it.
The advantage of a paper wallet is that it is not only simple, it’s free of charge and would look great as a gift for somebody.
The disadvantage is that a paper wallet can be stolen and used (stealing a hardware wallet is useless without the password). But also that paper and ink can degrade over time and that you immediately lose your Litecoin.
Hot Litecoin wallets
Hot Litecoin wallets are are connected to the internet, on a cloud or on a computer. As a result, they immediately have a big advantage over “cold” wallets for their ease of use. You have easy access to your wallet and therefore you can make and receive payments much faster.
The disadvantage is that this form of storage does reduce the safety of your Litecoins. The reason for this is actually very simple, you trust a third party. If something goes wrong because there is a leak in their system and they are hacked by this; as is your wallet and it’s ultimately not safe there.
Because of this, “warm” wallets are more suitable for smaller amounts of Litecoin.
LITECOIN DESKTOP WALLET
A desktop Litecoin wallet is designed to be downloaded and installed on a computer, tablet or laptop. They are both “hot” and “cold” in the sentences that they are usable on computers that are as connected as not connected to the internet.
Litecoin have their own stand alone wallet, which you can download here. However, most modern third party variants also offer possibilities for applications such as mobile and even via their online website. An example great of this is jaxx.
A desktop Litecoin wallet has some drawbacks; namely that it is only accessible on the computers on which they are installed. In addition, it also has the extra risk that there is a possibility that a virus hacks your wallet.
LITECOIN ONLINE WALLET
There are more and more Litecoin wallets available that operate on a cloud or online.
Of course the advantage is clear, your Litecoin is always easily accessible and a lot of trouble is handled by a third party! This is often the best option for keeping Litecoin for small quantities that you are actively using or trading. The easiest online wallet to use for UK residents is Coinbase, where you also immediately receive £10 Litecoin when you use our link (after a £100).
LITECOIN MOBILE WALLET
What if you don’t often have regular access to you computer but use your mobile more often? No worries, also mobile user there is a wallet available to store your Litecoin.
Besides the dexterity, you are also able to use your mobile camera to easily make payments through the QR codes!
Litecoin wallets for your mobile phone are more like mini-wallets. It would cost an incredible amount of data usage if your mobile phone constantly had to update the blockchain from Litecoin. As a result, your mobile phone does not use the entire blockchain but reliable nodes within the chain.
This makes it possible to simply make and receive payments on your mobile phone without taking up a lot of memory.
The disadvantage is of course that you have to rely on a third party.
We strongly recommend not keeping large amounts on “hot” wallets for a long time, but there is nothing wrong with using smaller amounts.
Litecoin debit card
If you just want to do your shopping, an online or mobile wallet is not yet convenient enough to make transactions in the normal marketplace. It is certainly possible to use a debit card for your Litecoin and use it to make purchases in a store. Just like you would with your normal bank card!
How do I safely use my Litecoin?
Good encryption is half the work
Most wallets offer the possibility to encrypt them with a password. Make sure you choose a secure password that can not be easily guessed or hacked. Hackers are able to crack a lot of passwords with computers. Contrary to popular belief, in the world of cybersecurity there is no complexity of a password that counts; but the length!
So we recommend that you choose a phrase as a password that you can easily remember. An example of such a password is “Thisisareallygoodpw.”; this example would cost a computer two years to crack.
Make enough backups
You can easily make backups of your wallets. This is often also offered as an option within the wallet!
If applicable, use multisig
You’re probably wondering; what is multisig? Multisig stands for multi-signature transactions or in other words a transaction that requires multiple signatures. This means that in the event of a transaction, several parties must provide confirmation before the transaction is actually executed.
This is an extra layer of safety that can prevent someone from being able to sit on your Litecoin just like that. But it is also a great feature for people who want to share an Litecoin wallet for a business purpose. You have the assurance that no one can spend money without the other person’s permission.
TIP: You can also use multisig with multiple devices. This means that you do not need extra people to keep your Litecoin wallet safe, but just yourself on multiple devices; such as an ipad and telephone, you must approve your transaction.
A large amount of Litecoin? Then go offline
As we have discussed earlier in this chapter. There is nothing like an offline storage space when it comes to safety of your Litecoin. No one can come to your Litecoin, and you are certain that your money is safe during a cyber attack.
If you have to store a large amount of Litecoin, having a hardware wallet is highly recommended, and almost not optional!
Frequently asked questions: Litecoin Wallets
Are Litecoin wallets safe?
Litecoin is a Blockchain and is therefore safe here. Especially because a wallet does not really store the Litecoin, but rather the transactions within the network.
The security of your wallet itself depends on how you handle it. You have the responsibility yourself to keep your private key for yourself. Since these are the only way to access your wallet, it is up to you to keep them safe and not lose them.
Is a Litecoin Wallet anonymous?
All transactions and wallets within the Litecoin Blockchain are naturally open to viewing for everyone. Yet all wallets and transactions are anonymous, because a wallet is nothing more than a series of numbers and letters. A wallet does not contain any personal data where someone can link your wallet to you.
It is true that at the moment your wallet comes into contact with a bank account, because you deposit or receive money from a wallet. The anonymity is naturally gone quickly again.
Because of this aspect, Litecoin is also called pseudo-anonymous.