If you are new to the world of cryptocurrencies and Bitcoin and you are wondering how to store your coins, then that’s the article you need to read. We will learn about cryptocurrency wallets, how they work, which are the different kinds of wallets and more.
In the article we will analyze the most common types of cryptocurrency wallets available in the market.
What is a Cryptocurrency / Bitcoin Wallet?
A Bitcoin wallet is a program that allows you to store Bitcoin or other cryptocurrencies. There are different wallets and each of them have different characteristics. There are paper wallets, hardware wallets, desktop wallets and smartphone wallets.
Some of them have different layers of security and others are more useful to spend your cryptocurrencies.
There is no a killer wallet that is the best in the market, but the wallet that you will consider the best will depend on your necessities and needs. For example, if you just started with cryptocurrencies and you have a small amount of them, you will prefer smartphone wallets or to store your coins in cryptocurrency exchanges.
If you are a wealthy individual with an important amount of cryptocurrencies, the best would be to store them in a hardware wallet.
With a cryptocurrency wallet, you are able to send, receive or store your currencies. It works in a similar way to other financial services.
This may be the first cryptocurrency wallet that you can have. If you have a smartphone, you will feel very comfortable using it. In general, the most important feature of these wallets is its usability and portability. If you are a heavy cryptocurrency user and you want to spend your crypto in different shops, then this is one of the best wallets you can have.
You can access to it very easily and it is portable. You just take it in your smartphone, everywhere you go. Like a real wallet.
A negative point of these kinds of wallet is that they are not so safe as hardware wallets. Due to the fact that your phone is in constant contact with the internet, it may be affected by a virus. This virus might be able to store your wallet information and steal your bitcoins (or other crypto).
If you prefer portability over security, this is a good choice for you.
These are also popular cryptocurrency wallets. They are easy to use, as mobile wallets, and they give you the possibility to send, receive and store your cryptocurrencies from your computer. As the mobile wallet, this is not the safest way to store your cryptocurrencies, unless your device is not connected to the internet.
If the computer is affected by a virus or any malicious program, then the wallet is in danger and its funds can be stolen. Of course, you know how you use your computer, if you feel safe about it, then desktop wallets are very versatile.
Additionally, you can have a nice interface to manage your cryptocurrencies rather than a small screen in your smartphone. It is better for users that prefer to have everything in the computer rather than in the phone.
These may be the safest option for individuals who want to store their coins very safely. These wallets are physic devices that store the private key of your coins. This is very important, because the private key allows you to have control over the cryptocurrencies you hold.
These devices are similar to pen-drives that connect to your computer but they never share the information with it. The private key is always stored in the device. It is the safest way to store your cryptocurrencies because hackers do not have access to it and the owner of the wallet needs to physically hold the device to process a transaction.
If you have several cryptocurrencies, it would be the best option to have this wallet as the favourite option. If you do not plan to use your cryptocurrencies, then this is the right choice for you.
Other Cryptocurrency Platforms
Traders, for example, hold their cryptocurrencies in cryptocurrency exchanges. This allows them to have access to their coins at any moment. But this is not the safest way to store your cryptocurrencies. Even when the different crypto exchanges have implemented different security layers, the truth is that several of them have suffered from hacks.
When that happens, cryptocurrencies are stolen and individuals lose most of their investments if not all. Furthermore, cryptocurrency exchanges may not refund investors after the attack.
Coinbase is one of the most known platforms all over the world. There you can buy Bitcoin, Bitcoin Cash, Litecoin and Ethereum in just a few steps. If you want to know more about it, check this step by step guide.
As we have written, there are many different wallets in the market. Most of them target different kind of users. You can also have two different wallets, or as much as you desire. You can leave some of your cryptocurrencies in an exchange and others in your hardware wallet.
At the end of the day, you are the one that decides where to keep your coins, how you protect them and which use you give to your wallet.
Images Provided by Coinbase, Trezor, Ledger Wallet.
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Please always only invest within your means and do so responsibly.