Market research has shown for years that the trend keeps going away from PCs and laptops and towards the use of smartphones. The fact that most companies and service providers have their own apps has made it relatively convenient to use services on a much smaller screen.
Various applications in the environment of cryptocurrencies and blockchain technology are no exception here and are increasingly becoming the norm. However, the use of a mobile device is subject to other conditions that require special attention when working with cryptocurrency wallets.
In this article, we would like to show you what you should pay attention to when using a wallet on your smartphone. Some of the aspects also apply to laptops, as they are also mobile, although subject to a different type of use.
Lost, Damaged, or Stolen – Mobile Devices Are Insecure
Many of our readers will already be familiar with the situation: A minor mishap and the smartphone gets damaged. In the worst case, it can even be destroyed altogether; for example, devices that are not protected against water very quickly suffer a total loss when they come into contact with liquids.
This makes the backup strategy for smartphones particularly important in more ways than one, as a number of applications can be identified that are used with them and are specific to cryptocurrencies:
Mobile wallets for cryptocurrencies
Apps for 2-factor authentication
Trading apps of various exchanges
Portfolio tracking apps
It is not uncommon for all data or logins to be permanently stored on the device. Therefore, in many cases, you can access the apps directly and unfiltered after unlocking the smartphone.
Considering that a device can quickly be lost or stolen, you are therefore exposed to a much higher risk than when using your home PC so crypto recovery services can be more challenging.
As a general rule, you should always make backups of wallets as the risk of losing smartphones suggests strict adherence. If you don’t know how to make backups and what to keep in mind, you can read more about it in the first part of our article series.
Important Rules When Using Mobile Wallets and Crypto Apps
Besides backups, your own usage behavior is the most important tool in order to avoid the risk of suffering a financial loss. By adhering to simple rules, a higher level of security can be achieved. In particular, the following points should always be kept in mind:
Only a fraction of one’s crypto assets should ever be stored on a mobile wallet.
If the smartphone does not take appropriate precautions by default anyway, access to all applications should only be possible after entering the device password.
In addition, it may be advisable to encrypt the smartphone. This is activated by default on iOS, but on Android it sometimes has to be activated manually in the settings.
If possible, tracking apps should not give strangers any information about your assets.
It should be ensured that the smartphone can be locked remotely in case of loss and that it can also be reset to factory settings remotely.
In principle, a mobile wallet is very similar to the wallet that’s in your pocket. If you have 100,000 euros in your bank account, you don’t carry it around, but only take the amount with you that you need on the road. Since the acceptance of cryptocurrencies for on-site payments is very limited, most users will probably only have the coins on their mobile wallet that they may want to quickly transfer to an exchange in order to be able to react to unforeseen events when trading.
Here, everyone has to do some soul-searching and individually weigh up the risks and benefits as to whether permanent storage on the smartphone makes sense for them.
Another option is to rely on a hardware wallet. For example, Ledger devices can be paired with the smartphone via Bluetooth. This provides a much higher level of security because the smartphone is only the interface and the wallet is on the other device. It is possible to lose the hardware wallet but these devices are much more secure in case a finder or thief tries to crack the password. For example, Ledger devices delete the seed on the hardware wallet after three incorrect entries of the device password, thus preventing any further attempts.
With a mobile wallet, there is often no file that can be copied from the smartphone for backup. Instead, most applications rely on the user noting the seed when the wallet is created and then keeping it safe. This also has the advantage during recovery of not being tied to a specific device or software.
That depends on a number of factors. Overall, however, it can be assumed that many smartphones do not enjoy a particularly high level of protection, depending on their configuration, especially if an unauthorized person gains unlimited access to the device and has the corresponding knowledge and means.
Of course, there are many differences between the various apps. We can’t make a specific recommendation, but there are certain features that a wallet should have. It must be possible to make a backup, whether by seed or file export is secondary. The wallet must be able to be secured and encrypted with a separate password.
Yes, if the seed is not backed up by default. The seed can be imported into any wallet software that supports the appropriate format. Therefore, you do not have to use the same combination of hardware and software in case of loss.
Even in the case of mobile wallets, each recovery is an individual case, which is why it is impossible to give an answer to this question without looking into the case. Basically, there are a number of possibilities if the device on which the wallet was used is still available.
Robert first came into contact with cryptocurrencies in 2013 through mining.
In 2018, he founded Bitcoin-Kurier, where he has been reporting daily on topics from the crypto space. For Rewallet, he writes articles to help readers navigate within this space safely.
Bruno Krauss
