  The rapid growth of decentralized digital currencies, enabled by blockchain
technology, has ushered in a new era of peer-to-peer transactions,
revolutionizing the global economy. Cryptocurrency wallets, serving as crucial
endpoints for these transactions, have become increasingly prevalent. However,
the escalating value and usage of these wallets also expose them to significant
security risks and challenges. This research aims to comprehensively explore
the security aspects of cryptocurrency wallets. It provides a taxonomy of
wallet types, analyzes their design and implementation, identifies common
vulnerabilities and attacks, and discusses defense mechanisms and mitigation
strategies. The taxonomy covers custodial, non-custodial, hot, and cold
wallets, highlighting their unique characteristics and associated security
considerations. The security analysis scrutinizes the theoretical and practical
aspects of wallet design, while assessing the efficacy of existing security
measures and protocols. Notable wallet attacks, such as Binance, Mt. Gox are
examined to understand their causes and consequences. Furthermore, the paper
surveys defense mechanisms, transaction monitoring, evaluating their
effectiveness in mitigating threats.
