Everything You Need To Know About Crypto Wallets
by Emma Feller
Cryptocurrencies like Bitcoin are becoming more popular by the day. As they grow in popularity around the world, it’s becoming even more important to keep your crypto safe. That’s where crypto wallets come in.
Whether you’re a crypto investor with your eye on the market or you simply have a few meme coins you want to protect, a good crypto wallet is a must. We’ll walk you through some interesting facts and tips you need to know about understanding and choosing the right crypto wallet for you and your needs.
Fun fact: Crypto wallets don’t actually store your cryptocurrency. Instead, they store the keys used to access your crypto on the blockchain.
What Are Crypto Wallets?
When you purchase cryptocurrencies or trade your way to crypto assets, you can choose to leave the keys you receive for that crypto with the exchange. Many users do exactly that, and they trust that the exchange is secure enough to protect those virtual coins.
However, moving your funds to a crypto wallet is a good idea. That’s because crypto wallets are designed to keep your crypto safe using the blockchain. Rather than storing your crypto in one place, wallets keep your public and private keys safe.
How Do Crypto Wallets Work?
A crypto wallet is a software that stores keys to ensure that no one else can access your funds without your permission. Because cryptocurrencies are so easy to move from one place to another, it’s important that only you have the ability to access your wallet.
A private key is like a password to your bank account and provides access to your crypto. It should never be shared in public or with people you don’t trust.
On the contrary, public keys are how you send and receive payments via your wallet with those around you. This is essentially your wallet address and doesn’t give anyone access to what’s in your account without your permission.
Above all else, it’s vital that you and the people you trust are the only ones who have access to your crypto wallet. Your passwords and account access codes should be stored in a way that only you will know. Never entrust your codes to memory only, and always make sure that you have a safe backup where you can find it.
5 Types of Crypto Wallets
Did you know that the first crypto wallet was created by Satoshi Nakamoto – the mysterious creator behind Bitcoin? This took place in 2009, and since then, crypto wallet technology has changed and evolved in many ways. Now there are multiple different ways to store your crypto keys safely.
Wallets fall into different categories, including Hot Wallets and Cold Wallets. Hot wallets are connected to the internet, easy to use, and best suited to beginners. They are also more likely to be hacked, but even this is not an easy feat.
Cold wallets are kept offline and are physical in nature. There’s less threat of being hacked, but they also tend to be more expensive and are less convenient. However, they are very secure and are considered by many to be the best way to store your keys.
There are different types of wallets within those categories, and each one has its merits. Here are some of the popular types of crypto wallets on the market, but there are many more options available.
Online or web wallets are a form of hot wallet that lives on the internet. You can access the wallet via the web on your desktop, tablet or mobile device. It means that all of your private and public keys are stored and managed by a third-party website. This is one of the most popular forms of crypto wallet around.
The internet is filled with web wallets that have millions of customers every day. Some of the most popular options include eToro, Coinbase, Kraken, Robinhood, and MetaMask. If you choose one of these wallets, get comfortable with how they run and learn everything there is to know about how they manage your account.
This is a hot wallet that lives on your mobile device via an app. You have quick and easy access to your keys when you need them, and your funds can be moved around with the flick of your thumb. The user interface is generally very easy to use and provides updates about your crypto.
This is a cold wallet that lives directly on your desktop. Your private keys are stored on the server, and you can unplug this device from the internet to keep it as secure as possible. These are also great for keeping as a backup in case your main wallet is lost or corrupted in any way.
Hardware wallets are the most popular type of cold wallet as the keys you own are kept on a device, much like an external hard drive or portable drive. They are not connected to the internet, and storing them in a safe is easy, but they can also easily be misplaced. Hardware wallets can also be quite pricey.
The ultimate cold wallet is a process of storing your private and public keys that requires printing and storing a piece of paper in a safe place. It also includes a QR code for each key to make using it easier. Paper wallets are one of the most popular ways to store large sums of crypto as they can discreetly be hidden from prying eyes or even stored in a bank safety deposit box if needed.
Depending on the wallet type you choose, there will be different requirements for setting up and maintaining it in the long run. Whether you choose a wallet connected to the internet or you choose to take it offline, you will need to ensure that the strictest security measures are followed and that you never lose access to your keys. Do your research and always have total peace of mind that your crypto is safe.
How To Choose a Crypto Wallet
Before you choose which crypto wallet to entrust with your funds and keys, there are a few factors you need to keep in mind. Once you’ve done your research and you know what to expect from your wallet of choice, you’ll be ready to start transacting with total peace of mind.
Security – A crypto wallet should provide the best possible security options, whether online or offline. You should never fear that your funds or keys may be in danger of being hacked or lost. Make sure that the wallet you choose will suit your needs before you entrust it with your precious crypto.
Ease of Use – If you’re new to the crypto world, you’ll want a wallet that is easy to use and not too complicated to maintain. Even those comfortable with using and moving crypto around should ensure they know exactly how to navigate a wallet rather than attempt to use it and hope for the best.
Costs – Most wallets have costs involved. Whether it’s a sign-up fee, a maintenance fee, or you need to purchase a physical wallet to get started, the costs must be considered. If there are multiple versions of the wallet you’re considering, choose the most cost-effective option that will still do the job you need it to do.
Reputation – An online crypto wallet should have a reputation that you can trust. You want to make sure that the wallet, or the company maintaining your wallet, can be trusted in the long run. If that changes, pull your funds and move to a new wallet that can keep your funds safe.
Always make sure that you read all of the terms and conditions when signing up, purchasing, and using a hot or cold wallet option. Do your research, watch how-to videos, and ensure that you’ve made the best choice for your needs.
Are crypto wallets secure?
Yes! In fact, crypto wallets are designed to be some of the most secure technology on the market. With many ways to bolster your wallet’s security levels, you can rest assured that your crypto is in good hands if you choose a trusted wallet.
Can I use the same crypto wallet for different currencies?
The majority of crypto wallets support storing multiple different cryptocurrencies at a time. The cryptos that are supported should be clearly stated on the wallet’s website, so be sure to do your research before you sign up.
What if I lose the private keys to my crypto wallet?
If this happens, you will lose all access to your wallet and the crypto stored in it forever. There’s no way to crack a crypto wallet without those keys, and they must be stored in a way that you will be able to access them in any situation.