CRYPTO WALLETS: Cryptocurrency like Bitcoin and many others have gained widespread acceptance and continue to grow in popularity over the years. Cryptocurrency is a digital currency stored in a digital wallet and its transactions are recorded in a public ledger.
A cryptocurrency wallet often provides you with encrypting and/or signing functionality. Crypto funds are safer when stored in a crypto wallet which gives you full control of your crypto and its security keys than when stored in an exchange account.
What Is A Crypto Wallet?
A crypto wallet is a software program or physical device that allows users to securely store and transfer their cryptocurrencies such as Bitcoin and Ethereum. It stores users’ private and public keys making them accessible for sending and receiving cryptocurrency.
A public key is a digital cryptographic code that allows users to receive and send cryptocurrencies to the wallet. The public key is used for digital signature verification which proves private key ownership. A private key is a complex digital cryptographic code that grants users access to their cryptocurrency.
It helps to protect users from theft and unauthorized access to funds by creating a unique signature that authorizes the transaction of bitcoin for the owner. Just like the debit card, anyone who has access to the private key of a wallet has full control over the crypto funds and the associated private key. When the private keys are held by a third party(e.g banks), it implies that the third party has full control over your funds while you only permit the sending and receiving of payments.
Note: If you’re considering investing in bitcoin or any other cryptocurrency, you may be on the hunt for the best crypto wallet. It is vital to find the right crypto wallet focusing on cost, user experience, supported cryptocurrencies, and the kind of safety net you want to have.
Types Of Crypto Wallet
Crypto wallets are of different types. It ranges from hardware wallets like Ledger and Trezor (which looks like a USB stick) to mobile apps like Coinbase Wallet or MetaMask, which makes using crypto as easy as transacting with a credit card online.
There are three basic categories of Crypto wallets: software wallets, hardware wallets, and paper wallets. Find out more about the latest crypto news now!
Software wallets are simply desktop programs or browser extensions that allow for easy crypto transactions. Software wallets are sometimes called “hot” wallets because they store the private keys to your crypto online.
They are either a Web Wallet —(cryptocurrency wallet that exists online only and can be accessed using a web browser or an internet-connected app), Or they can be installed as apps on a phone/laptop, which means that the private keys are stored on the local device.
It is necessary when using software wallets, to always create backups regularly. There is a possibility of losing the private keys to your wallet, resulting in permanent loss of funds if a problem occurs with your web browser or hard drive.
The 3 types of software wallets are:
- Web Wallets, such as MetaMask.
- Desktop Wallets, such as the Electrum.
- Mobile Wallets, such as the Blockchain.com wallet.
A hardware wallet is a physical device, about the size of a thumb drive, that stores the private keys to your crypto offline or in “cold” storage. This implies that all of the signings happen off of your computer making it much more secure.
Hardware wallets provide advanced levels of security for crypto assets from hackers. When compared with software Wallets, the cost and increased complexity of hardware wallets make it more inconvenient to be used. They can cost up to $100 to buy.
A paper wallet is another way to store your private keys. These keys are written on a physical medium like paper and stored in a safe place. But we recommend you not to store a large amount of money as it is exposed to a high risk of user error.
Which Crypto Wallet Can I Use?
There are different types of crypto storage options that can serve different purposes, depending on the goal of the user. If you are a Bitcoin investor, for example, who wants to invest a large amount of money for a long period, you may want the security of an offline cold storage wallet. The active crypto users, on the other hand, may choose the convenience and speed that an online hot wallet can provide. The following wallets are recommended for different purposes.
- Best for Beginners: Coinbase Wallet
- Best for Advanced Bitcoin Users: Electrum.
- Best for Mobile Users: Mycelium.
- Best Hardware Wallet: Ledger Nano X.
- Best for Security: Trezor Model T.
- Best for desktop users: Exodus
- Best for Your Bucks: Ledger Nano S.
For investors that want to store large sums of money for a long time, you are advised to go for a hardware wallet. Generally, It is recommended not to store your cryptocurrency in an exchange account. The best is to invest in a hardware wallet for offline storage. Also, you can invest in a non-custodial software wallet or coinbase app, which gives you full control of your crypto.
Coinbase App Vs Coinbase Wallet
The main Coinbase app (or Coinbase.com) which is available on iOS and Android allows you to buy and sell crypto. It is easy and secure if you want to exchange crypto for fiat currency and transfer it to a bank account. You only need a Coinbase app when investing in Bitcoin or another digital currency because it will securely manage the rights to your private keys. A Coinbase account is not needed when using a Coinbase Wallet app.
The Coinbase Wallet is an app that allows users to store and access their crypto, exploring the decentralized web with a damp browser. The users of Coinbase Wallet manage their private keys and store their crypto assets directly on their local devices and not with a centralized brokerage or exchange.
Note: It is not easy to exchange crypto for fiat currency and transfer it to a bank account when using Coinbase Wallet. One major thing about Coinbase Wallet is that it can be downloaded and used anywhere in the world.