Crypto is pretty much the Wild West of the speculation industry right now. It is a volatile market where beggars and millionaires are created in an instant. With that said, if you are keen on venturing into the crypto world, for whatever reason, you are going to need a wallet. Whether you want to move into the online gambling industry, such as IceCasino, transact on forex platforms, or simply want to hold it for speculation purposes, you’ll certainly need a wallet.
Don’t fret if you don’t understand what a wallet is. This article is all about bringing you up to speed on everything you need to know about wallets. Discover the different types of crypto wallets, the best to use under each category, and some of the factors you need to keep in mind when picking out a wallet.
What Is a Crypto Wallet?
Many people have the wrong concept or interpretation of crypto wallets. Just because it has the name ‘wallet’ doesn’t mean its sole role is to store money in it. On the contrary, these are ‘keys’ because they give you access to money stored on the blockchain. The wallet stores your private and public keys, which are like passwords. This way, you can easily ‘unlock’ the funds you have stored in the blockchain.
The Three Main Types of Crypto Wallets
There are hundreds of crypto wallets you can pick online. Yet, regardless of the sheer variety, they are all categorized into three main groups: hardware, software, and paper wallets. Below is a detailed review of each group and accompanying examples.
Hardware Wallets
Hardware wallets work the old-school way. They store your private keys offline, and because of this, they are sometimes referred to as ‘cold’ wallets. To complete a crypto transaction using hardware wallets, you must plug them into a computer and connect them to the internet.
Hardware wallets offer plenty of advantages. For example, since they are not connected to the internet, they are hard to hack or access unless you are the legitimate owner. This makes them the safest. While they may offer the best security, they are also the most expensive, making them unsuitable for anyone looking to transact frequently. In fact, they are highly recommended for those looking to hold Bitcoin. The best hardware wallets for cryptocurrency include:
- Ledger Nano X – best hardware wallet overall;
- Trezor One – has the best mobile application;
- KeepKey – offers cheap transactions.
Software Wallets
As the name suggests, this is a piece of software, such as a browser or an app, which stores your private keys online. You can access them from your mobile device or PC. Software wallets are mostly connected to a specific type of crypto or exchange. Because they are connected to the internet, they are usually referred to as ‘hot wallets.’
There are many disadvantages associated with this type of wallet, especially when you consider security and safety features. First, they are the most vulnerable regarding security since they are connected to the internet. This makes them an easy target for phishing attempts and hackers. Additionally, they are connected to cryptocurrency exchanges for convenience. Therein lies the danger. The exchange operators can easily decide to go rogue and steal your funds. If the exchange goes bankrupt, your funds go down with it. Having said that, these are some of the best software wallets you can benefit from. There are thousands of wallets, but these have a stellar reputation online. They are also regulated.
- Coinbase;
- Binance;
- eToro;
- MetaMask;
- Electrum.
Paper Wallets
As the name suggests, this is a piece of paper featuring two randomly generated QR codes as well as your public and private keys. Like hardware wallets, it is a ‘cold wallet’ as the information is stored offline. While it is not susceptible to dangers associated with internet connectivity, it faces other challenges. These include printing issues, general wear and tear, environmental damage, and theft; because of this paper wallets have become less popular over the years despite being considered one of the best ways of storing keys back in the day.
Choosing Your Wallet: Factors to Consider
Should you choose to pick a different wallet besides the ones recommended on this page, there are a few points you must consider:
- Multi-currency support: ensure it supports more than one currency. If you are using the USD to purchase your crypto, ensure you can also use other internationally accepted currencies
- Regulation and reputation are key to any wallet. Only create an account with a platform or brand that is regulated and licensed. This requires plenty of research and a deep understanding of how the industry works
- Length of time for storage: when considering this, ask yourself whether you are looking to buy and sell quickly or looking to buy and hold.
Keep Your Digital Money Wisely
After all is said and done, crypto wallets conduct KYC verification, but that doesn’t mean your information on the blockchain is compromised. Anyone who is looking to use software wallets must complete the KYC verification process, as these exchanges are required by law to protect their users. If you don’t wish to upload your personal information completely, then you should use the hardware wallets.
