Crypto wallets are becoming more and more popular as the world is starting to wake up to the potential of cryptocurrency. This post will discuss what a crypto wallet is, how they work, and some of the best ones on the market today.
1. What is a crypto wallet?
Crypto wallets are digital devices used to store cryptocurrencies. They can be software or hardware-based, and come in a variety of different shapes and sizes.
Crypto wallets work by creating a public address and private key. The public address is what you use to receive cryptocurrencies, and the private key is used to access your wallet and send currencies. Most crypto wallets will also require you to create a password to protect access to your wallet.
Crypto wallets can be compatible with any cryptocurrency and don’t need to correspond with a particular blockchain (although they usually do). This makes them incredibly flexible and useful for both people who are just starting out in the world of crypto, as well as seasoned pros.
The most important thing to remember about crypto wallets is that they are not one size fits all. Different wallets offer different features, so it’s important to choose the right one for your needs.
Some wallets are designed for security, while others are geared towards convenience. Some allow you to store multiple cryptocurrencies, while others are limited to just one or two.
2. Types of wallets
So how do you choose the right crypto wallet? Here are a few things to consider:
- How many cryptocurrencies do you want to store?
- What level of security do you require?
- How often will you use your wallet?
There are two basic types of wallets: Software based or Hardware based.
Software based Wallet
A software based wallet is really three sub types.
- Web based Wallets: These are easy-to-use wallets like those hosted by an exchange where you can buy and sell cryptocurrencies. Security keys are stored and managed by the wallet provider themselves and are very convenient but do carry some risks.
- Mobile Wallets: A mobile wallet is software on a smartphone or tablet. Some of these apps are non-hosted, meaning you’ll be responsible for saving and managing your private key to access your cryptos. This can be a viable option especially is you have a older mobile phone laying around. The main benefit of the mobile wallet is that it is separated from your main phone.
- Desktop Wallets: Much like their mobile counterparts, a desktop or laptop wallet is software for PC or Mac users. Many of these wallets offer cold storage options for added security.
Hardware based Wallet
A hardware wallet takes security a step further and allows for access to your cryptos to be stored on an offline piece of hardware like a special thumb drive. The wallet can be connected to a computer/laptop via USB or other port to facilitate transfers and transactions but are otherwise a way to keep crypto access in cold storage (not connect the internet for most of the time). This offers the highest level of security, but you’ll be responsible for keeping track of your device and security keys (like a private password only you know; more on that below). Popular hardware wallets are made by Ledger and Trezor.
If you only want to store a few currencies and aren’t particularly concerned about how secure they are, then a mobile or desktop sfotware wallet may be sufficient for your needs. If however, the safety of your funds is paramount – perhaps because you have a large holding – then you’ll need to look for a hardware wallet.
Similarly, if you’re looking for a convenient way to use your cryptocurrencies, then a mobile or desktop wallet would be best. If you’re often on the go and need access to your funds at all times, then a mobile wallet is ideal. And if you don’t want to have to carry around a physical device, then a desktop wallet is the way to go.
On the other hand, if you’re looking for an all-encompassing solution that can store multiple cryptocurrencies and offers high levels of security, then a hardware wallet is your best bet.
According to Money.com, the 2021’s most popular crypto wallets are:
- Coinbase Wallet – Best for Beginners: This popular wallet is incredibly user-friendly. It’s also excellent for storing Bitcoin, Ethereum and Litecoin, making it one of the most secure options available today.
- Electrum – Best for Bitcoin: This Bitcoin-specific wallet is one of the most popular on the market. It’s user-friendly and has a host of features that make it an excellent choice for storing your Bitcoin.
- Mycelium – Best for Mobile: Mycelium is a mobile app-only wallet. It’s simple to use and offers a host of convenient features, such as the ability to open your account using just one phone number.
- Ledger Nano X – Best Offline Crypto Wallet: This hardware wallet is the ideal choice for anyone who wants to store their cryptocurrencies in a secure offline environment.
- Exodus – Best for Desktop: Exodus is an excellent choice for anyone who wants to store multiple cryptocurrencies and access them easily from their desktop or laptop.
3. Find the right wallet for you
Remember, the most important thing is to choose a wallet that is right for you. With so many options available, there’s sure to be one that fits your needs. So take the time to research your options and find the perfect crypto wallet for you.
4. Security measures to take with your wallet
When it comes to security, there are a several things you need to keep in mind:
- Never ever reveal your private key to anyone (ok maybe your spouse).
- Make sure your wallet is backed up regularly and make sure that backup is stored off the device. If your device is lost or stolen, you’ll be able to restore your funds with a backup.
- Keep your crypto wallets updated with the latest security patches.
- Make sure your connection to the internet is safe and secure. Don’t use public wifi and make sure to use secure connections such as SSL (look for the padlock next to the URL) or even a VPN.
- Be vigilant about phishing scams and fake websites. Only download wallets from trusted sources, and never enter your private key or password into a website that you don’t trust.
- Enable two-factor authentication (if available) to add an extra layer of security to your account.
- Change your password frequently and make sure to not use the same password as you use for other systems or sites.
- Don’t put all your crypto currency in the same wallet. Think of your wallet as a physical wallet. You wouldn’t carry tens of thousands of cash in the wallet in your pocket or purse. I use two wallets so that if one gets hacked, I don’t loose all my crypto currency.
- When sending or receiving crypto, double check the address. Once it is sent, it cannot be recovered very easily.
- Do not use the browser “auto-save” feature of the browser. Rather, use a password manager like Last Pass, 1Password or BitWarden.
5. How to create a new crypto account – step-by-step process?
When you’re ready to start buying cryptocurrencies, I have had a positive experience using Coinbase. They offer a user-friendly platform and allow you to purchase Bitcoin, Ethereum, Litecoin, along with many others with fiat currency. You can also store your cryptocurrencies using the Coinbase wallet, making it a convenient all-in-one solution.
Sign up for an account on Coinbase.
Once you’ve signed up, now you can fund your account, receive cryptocurrencies to your account and even send cryptocurrencies. You can even exchange cryptocurrencies.
If you want to send, in the web app, click Send/Receive button in the upper right. Then go to “Accounts” in your dashboard. Click on “Send”, select the cryptocurrency you want to send, enter the amount you want to send, enter the public key of the receiver’s account, add a note if you want, and click Continue.
Next a confirmation will appear and you should verify the details and finally, click Send.
That’s it! You’ve now sent cryptocurrencies to another account.
6. Why should I use a crypto account instead of just using my bank account or credit card online?
Cryptocurrencies allow you to make secure and anonymous transactions, which is why many people choose them over traditional payment methods.
Furthermore, cryptocurrencies are not bound by the same regulations as fiat currencies (which means that they’re less likely to be affected by sudden changes in policy). Also, because there’s no need for a middleman such as PayPal, you can transfer cryptocurrencies between accounts at a much faster rate.
A decentralized system, blockchain is also incredibly secure and difficult to hack. Since there’s no central authority managing the ledger of transactions, hackers would have to compromise every single computer on the network to access data stored within it – an impossible feat!
However, if your wallet is lost or stolen, your funds will be gone forever. So it’s important to take the necessary precautions to protect your wallet and keep your cryptocurrencies safe.
Whether you’re new to the cryptocurrency world or a seasoned veteran, it’s important that you have a crypto wallet. This guide will show all of your options and help make sure you get an account set up with one for maximum security. Remember, stay safe out there! Check out my other articles on Cryptocurrency if you want more information about different aspects of cryptocurrencies.