It’s been all over the news how vulnerable older versions of crypto wallets can be. Right now, it’s the name of Metamask that has come out in the open, but I think there will be more to follow as well. This shows that using a crypto wallet isn’t enough, but one should ensure that it is up-to-date and has multiple layers of security. I also think it is better to divide the investments into multiple wallets to reduce the risks. Is anybody using multiple wallets here? If yes, then which ones are those, and how good are their safety features?
The fundamental rule is the farther away your private keys are from the online environment, the more secure your wallet will be. Cold wallets are the safest option there is by the reason that private keys never touch the Internet. But what is equally important in the case of cold storage and what differentiates them from, say, hardware wallets is that they aren't equipped for recurring payments. Once you find that you need to spend from your cold storage, you can make your payment, and you need to move the leftover to completely different cold storage, which has never been used for payments before. Hardware wallets, even air-gapped ones, are a little bit closer to the Internet than cold wallets, which makes them more suitable for day-to-day transactions, but that involves certain trade-offs such as the necessity to somehow communicate with a computer in order to function properly. Software wallets are the least safe option because private keys are closest to the Internet and, therefore, always are at risk of being intercepted by a bad actor. Whether it is a desktop or mobile wallet, when you unlock your wallet by inserting your password, your private keys stop being protected by encryption algorithms and are basically stored as plain text that can potentially be seen by whoever spying on your device.