The gaming industry has been evolving massively within the past decade, being fueled by continuous technological advancements. In the past few years, blockchain technology has been integrated into the gaming industry, which has provided gamers with various new opportunities. These include earnings, trade, and owning valuable in-game assets. Such assets could be cryptocurrencies or non-fungible tokens (NFTs).
As exciting as this newly established digital wealth is, as such does it also presents security challenges, especially since hackers target high-value assets stored in games and on online platforms. According to a report by Grand View Research, the global blockchain in gaming market size was valued at USD 4.83 billion in 2022, which is a figure that is projected to grow exponentially in the coming years. As a result, any gamer should secure their in-game digital assets, which is why having a reliable crypto wallet is a necessity.
Understanding crypto wallets
Crypto wallets refer to digital tools for storing cryptocurrencies. You can store a variety of items on crypto wallets, including Bitcoin, Ethereum, in-game tokens, or NFTs. However, you should not perceive crypto wallets as an actual wallet. You are not directly storing your assets in the wallet, but the wallet is holding the private keys giving you access to your assets on the blockchain. The private keys are at the core of your assets, so protecting them is essential. Losing a private key means losing access to your assets permanently.
Due to the crucial role of crypto wallets, it is of the highest importance to find a crypto wallet provider with a high level of security, to whom you can trust your keys to. To ensure the safety of your digital assets, you can use bestcryptowallet.com to compare various crypto wallet providers. By seeing what is available on the market, you can easily get an overview of your options and choose accordingly.
Hot versus cold
There are two main categories of wallets, namely hot and cold wallets. Both have ups and downsides to them, and the choice of which one to pick depends on your holdings.
Hot wallets
Hot wallets are connected to the internet. This makes them easy to access for frequent transactions. The convenience of hot wallets makes it a great solution for gamers needing quick access to tokens or trading NFTs quickly on platforms. Most hot wallets include features such as phishing attack protection and two-factor authentication (2FA) to ensure the security of the platform.
A downside to hot wallets is their online nature. Since they are online, they are more vulnerable to cyberattacks. By June 2024, more than USD 1.38 billion worth of crypto has been stolen, compared to USD 657 million in the same period in 2023. Hot wallets were a major target.
Cold wallets
Contrary to hot wallets, cold wallets store private keys offline, making them less vulnerable to hacks. Cold wallets are hardware wallets that store your private keys on physical devices. These devices must be connected to a computer or phone to complete a transaction. It is recommended to use cold wallets for long-term storage of holdings of significant size, especially for rare NFTs and large amounts of in-game currency.
Reports confirm that cold wallets are considered the most secure way to store crypto, since it reduces the risk of exposure to malware and phishing attacks. However, cold wallets have another downside: They can be lost. Since cold wallets are hardware-based, there is a risk you can lose your wallet and access to your holdings.
Security features of crypto wallets
The security of your in-game assets does not only depend on the wallet type. The security features of crypto wallets are just as crucial. Every single crypto wallet uses a private key to authorize transactions, which have been randomly generated with a string of characters, making it unique to your wallet. This is also why losing your private key is equivalent to losing your assets entirely. In addition, many wallets offer multi-signature security. Having this feature entails using multiple private keys from different users or devices in order to authorize transactions. This type of feature is especially utilized by gaming teams that share assets.
There are some crypto wallets that are using multi-party computation (MPC), which is a security measure splitting up the private key across various devices. What this solution entails is that if one device is compromised, the hacker still cannot access the full private key. Another widely used security feature is 2FA, where an additional verification step is required alongside your password.
Best practices to secure your in-game assets
Regardless of the type of wallet you use, you are advised to adopt security practices to protect your digital assets. One way to do so is by using different wallets for different purposes. For example, it can be beneficial to use both hot and cold wallets to have quick access to trading while keeping your most valuable assets stored safely. You should also backup your private keys in secure locations, either having physical backups or digital backups stored in encrypted devices.
As the value of in-game assets continues to skyrocket and the gaming industry continues to grow, the need for safely managing digital wealth is higher than ever. It does not matter if you are a casual gamer or a professional – securing your assets with crypto wallets is crucial in the current digital world.