With the wide array of cryptocurrency wallets in the market, it can be difficult to select the right one that would suit your needs, especially if you’re a beginner. To help you keep up with the ever-changing trends in the crypto world, this guide provides you with the basics of using crypto wallets.
What is a crypto wallet?
Cryptocurrency wallets are software programs that allow users to store and transfer their crypto coins to other users. You can have complete control over your digital assets using a computer, mobile phone or other devices.
How do cryptocurrency wallets work?
Crypto wallets generate the information necessary for sending and receiving cryptocurrency through blockchain transactions such as public keys, private keys and an address. When making transactions, a user only needs to share their address to receive coins.
On the other hand, the private key is used to access the wallet and must not be disclosed to anyone else.
Types of crypto wallets
Cryptocurrency wallets vary depending on how they operate such as hot and cold wallets. However, the main three types are hardware, software and paper wallets.
Hot vs cold wallet
These wallets mainly vary in their dependence on internet connection. Hot wallets are connected to the internet which makes them convenient and easy to set up. Users can quickly access their funds and enjoy an intuitive interface.
On the other hand, cold wallets are accessible offline through a physical medium and they are less vulnerable to hackers and computer malware.
Hardware wallet
Compared to other wallets, hardware wallets are the most secure since the crypto coins are stored using an equipment. These often come as an object similar to a USB device equipped with an OLED screen and side buttons.
Paper wallet
A paper wallet is a piece of paper with a unique QR code that contains the private key of a user. The code must then be scanned when making transactions.
Software wallet
Mobile wallet
If you often make daily transactions, then a mobile wallet is suitable for you. It has similar features as a desktop wallet except that you can access it using your mobile phone. Mobile wallets are compatible with iOS and Android operating systems and support payments through near field communication (NFC) and touch-to-pay system.
Desktop wallet
This wallet is a type of computer program that you can install on a desktop or laptop. It provides users with a private key that they can use to control their wallets. Through this, they can make transactions such as sending or receiving coins. Some of the best desktop wallets you can try are Armory, MultiBit, Bitcoin Core, Electrum and Hive OS X.
Web wallet
Web wallets allow users to access their digital coins through an internet browser. You can do this using a laptop or desktop computer and store your private keys in a hosted or non-hosted platform. Some web wallets you can use include Coinbase, Blockchain and MetaMask.
Tips on keeping your wallet secure
Use reliable sources
Be cautious of softwares that contain malware in the guise of a wallet. Make sure that your sources are trusted and reliable before installing any application on your device.
Opt for strong passwords and authenticators
Avoid using simple passwords that only contain letters and words that are easy to recognise. It’s better to use at least 16 characters, incorporate a few numbers and punctuation marks to make the password stronger and more difficult to break.
Keep your passwords to yourself
Do not share your passwords and recovery phrases with anyone else. Otherwise, you are putting your assets at risk.
Backup your wallet
You can avoid incurring unnecessary losses by backing up your wallet.dat files that contain your public and private keys, scripts, key metadata and other transaction information. Aside from this, you must also backup your password and seed or recovery phrases.
Update your software
Make sure your wallet is up-to-date with the latest version of the software so that you can take advantage of its security features.
What crypto wallet should I use?
There are many kinds of wallets available in the market. Continue reading to find out which cryptocurrency wallet is perfect for you.
Hardware wallet
Trezor One
This hard wallet was developed by SatoshiLabs and offers users a trusted and secure wallet through its password management and two-factor authentication. It has a user-friendly and convenient LED display that suits beginners and advanced users alike.
Trezor One supports numerous crypto coins and tokens and is compatible with different operating systems including Windows, Mac, Linux and Android.
KeepKey
Developed by Shaftshift, Keepkey comes in the form of a USB device. It has a sleek design and anodised aluminium coating that makes it durable, portable and compact.
Since this wallet does not use an operating system, it is more secure and less susceptible to malware. No other software can be installed on this device so that the wallet remains protected from computer vulnerabilities.
Ledger Nano S
Ledger Nano S is a more secure wallet compared to its older counterparts. This hardware wallet has a durable and compact design that makes it easy to carry. It protects your assets through its PIN code and 24-hour recovery phrase that serves as your private key.
Trezor Model T
This wallet offers improved security and experience through its intuitive interface that also functions as a touch screen device. To make your digital assets safe, it uses a custom PIN code in all of your processes.
Its firmware updates provide additional security to your wallet by using a firmware verification request every time you load your device. This ensures that the wallet is not being accessed by random and harmful malware.
Software wallet
Coinbase wallet
This wallet has a straightforward and user-friendly interface that uses a simple username when you make transactions. Upon setting up your Coinbase wallet, you will receive a 12-word recovery phrase that will keep your coins safe.
It also offers users the option of saving their recovery phrases on Google Drive or iCloud. Another feature of this wallet is its mobile decentralised app or dApp, which is a web browser that allows the wallet to interact with the website that you’re visiting.
eToro wallet
eToro wallet has comfortable and easy-to-use features that make it a perfect choice for beginners. This is because it supports more than 120 cryptocurrencies and over 500 crypto pairs. Moreover, this wallet appeals to many users because it follows strict standardisation protocols to ensure that the crypto assets remain secure.
Electrum
Electrum boasts servers that have no downtimes so you can enjoy fast transactions anytime. It supports multi-signature services which allow users to access digital assets from several wallets.
Exodus
This wallet features Simplified Payment Verification which uses a series of servers to keep track of transactions instead of downloading complete blockchains. You can use this wallet without going through any form of registration.