- Sep 23, 2021
If you’re looking to trade Bitcoin or any other cryptocurrencies out there, you will probably come across something called the crypto wallet. This is your absolute must if you are keen on making the best of the crypto world by organizing your digital money. After all, so many individuals and businesses are turning to crypto. And it’s only a matter of time until we all start using digital currencies daily.
So, if you’ve been thinking about getting deeper into the crypto world, you will need a crypto wallet. Find out here what different types of crypto wallets already exist and how to choose your first one.
Also known as a Bitcoin wallet or crypto wallet, a cryptocurrency wallet works similarly to your traditional wallet. Yet instead of paper cash, it contains the digital version of your cash. This type of wallet will store all of your public and private keys you’ll need to purchase Bitcoin or any other cryptocurrency. It also provides digital signatures authorizing each of your transactions. A cryptocurrency wallet can be a device, program, app, website, or even a service that is offering by crypto exchanges.
Your private key, which allows you to unlock your cryptocurrency wallet, will need to always be safe and secure for cryptocurrency exchange. Let’s say you wish to buy or trade Bitcoin, or any other cryptocurrency you have. In that case, you will need to provide a wallet address to ensure the digital currency is transferred to you.
The majority of crypto wallets will be password-protected and will offer various security features like encryption, two-factor authentication, and more.
Cryptocurrency Wallet Types
Cryptocurrency wallets come in various formats. Each of them has its pros and cons depending on the security and use for trading. Yet, regardless of the format, security will mostly depend on the user. If a user has ensured they are safeguarding all the passwords which provide them with access to their digital wallet, security will not be an issue. These wallets are based on two categories: hot storage and cold storage wallets.
Hot Storage Crypto Wallets
Hot storage crypto wallets are the ones directly connected to the Internet – phone app, online provider, or desktop software program. All of these are completely free, however, they contain certain security risks as they are potentially susceptible to online theft due to their Internet connectivity. Although online theft has dropped significantly in the past few years, keep in mind that you should make sure you’re keeping your digital cash safe. As well as you do with paper currency.
You will find plenty of options when it comes to hot storage crypto wallets. Such as Ethereum wallet which offers all you might need – desktop, mobile, web, and hardware.
These wallets are apps that are running on your computer and are storing all your cryptocurrency on your desktop computer. The advantage of a Bitcoin desktop wallet is that you will have complete control of your funds, so there’s no fear of losing it or having your funds frozen by a third party. Here, you will need to be focused on security, so ensure your wallet is well secure and has a back-up
and, most importantly, that your computer is safe from malware. Some of the popular desktop wallets are Atomic Wallet, BitPay, Bitcoin Core, and Electrum.
Mobile wallets are apps running on your smartphone to store and control your funds. There are mobile wallets for both iOS and Android operating systems making them very efficient for face-to-face payments. Also, by using QR codes, you will be able to make quick payments.
Just like desktop wallets, you will have the responsibility to back up your smartphone. Just to ensure your digital cash is safe from any events that might occur. Some of the popular mobile wallets include Bitcoin Wallet, Atomic Wallet, Exodus, and BitPay.
Web wallets provide browser-based wallets which can be used on desktop or mobile. However, they don’t offer the full control that is typical for traditional desktop or mobile wallets. Coinbase and brokerages offer cryptocurrency like Robinhood are providing users with web wallets.
Cold Storage Bitcoin Wallets
Cold wallets are small, encrypted portable devices that will allow you to download and carry your Bitcoin and other cryptocurrencies. You can expect your cold wallet to cost around $100 because the cash here is stored offline. Yet, this implies that cold storage wallets are much secure than hot wallets. Most of these wallet providers include a trezor and a ledger.
How to Choose Your First Cryptocurrency Wallet?
If you’re just getting started and you’re not nearly an expert in the crypto world, the best thing would be to use a combination of hot and cold wallets. This, of course, doesn’t mean that you should invest more than you can afford to lose. Start small until you start feeling more comfortable with the decisions you are making. From that point on, you will be able to earn money and enjoy your trading.