Part 4/13:
- Cryptography: Wallets are secured with 128-bit encryption, translating to an astronomically low probability of guessing a seed phrase—equivalent to guessing a star in the observable universe. This cryptographic strength makes Bitcoin Wallets highly secure, provided users generate and store seeds properly.
Best Practices for Wallet Security
Selecting the right wallet technology is critical. Cole categorizes wallets into four types:
Hot Wallets: Connected to the internet, convenient but vulnerable to hacking.
Cold Wallets: Keep private keys offline; hardware wallets like Coldcard, Ledger, or Trezor are popular choices.
Custodial Wallets: Managed by third parties like exchanges—not recommended for long-term security.