How does one choose the best crypto wallet? What are the differences between them? We answered these questions for you.
September 27, 2023
What's a Crypto Wallet—All You Need to Know
"What the heck is a crypto wallet?"
If you ever felt like some crypto tasks are like getting in the engineering zone of an Apollo mission, and you do not know what to do next—You've come to the right place.
No matter your experience level regarding the topic of crypto wallets, you're guaranteed to pick up some helpful info in this article. We've got you covered.
What is a crypto wallet, and why is it important?
A crypto wallet allows you to store, send and receive multiple cryptocurrencies. It's essentially a database that keeps all your public and private keys. Imagine the public key as a username and the private key as your password. You should never share your private keys. It's also important to mention that your money is not in your wallet. Actually, your crypto wallet has the information regarding the location of your money on the blockchain.
What are the types of crypto wallets?
Like there are more cryptocurrencies nowadays, there are different crypto wallets. However, their objective is the same; to facilitate transactions on the blockchain in a secure and accessible way.
A crypto wallet can be a mobile or physical device, a service, or an app. If stored online, it's commonly referred to as a "hot wallet", or if it's stored offline, for example as in a USB-like device, it is referred to as "cold wallet".
Online wallets
Online wallets, also known as software wallets can be hosted (by a third party) or be a self-custody wallet. Hosted ones are the most common. They're an accessible option for beginners since it's easier to set up and get started. For example, when you create your wallet on Coinbase.com, they're the ones responsible for keeping your keys and data safe. So part of the benefits is that if you happen to lose your passwords, you don't lose your cryptocurrencies.
Self-custody wallets, like Metamask, are a better option for people who want to make transactions with full access to their information anytime and in a faster way. Self-custody wallets do not rely on third parties. In this case, the user has complete control over their private keys (password).
Offline wallets
The benefit of a hardware wallet is the security it provides by holding your private keys offline. This type of wallet is stored on an external device that you should keep safely. Once you have your device, like a USB, you have to follow the instructions, download the software, and complete some steps to set up your account.
This hardware is turned off when the user is not using it, and the device will keep your money safe, even if the computer is hacked, representing one more obstacle for hackers. One more reason to consider offline wallets as a very safe option to protect your crypto. Cons: You're fully responsible for keeping it secure.
A paper wallet is another option to keep your keys and codes safe. It is not as popular now but is still valid. A paper wallet is a printed piece of paper with your data on it. The risks of this type of wallet are that it can be easily damaged by the printer itself, for example, the type of ink, or also because of the material of the paper, or environmental factors, or that the paper gets misplaced, and lost. If you’re opting for a paper wallet, consider keeping it in a safe deposit box—and always have a backup.
Are crypto wallets safe?
Crypto wallets are safe, but—we're guessing you knew a but was coming—there are risks, of course, like hackers and malware, and you losing your device or forgetting your passwords or private key. That's why we recommend you to verify the authentication of whatever wallet you choose. Set strong passwords, have a backup and store your private key and devices safe. Because once you lose your private keys, there's no way back.
Bonus: Check out our recent blog for valuable tips on how to avoid getting scammed in the NFT space.
What can you do with a crypto wallet?
You can think of it as a regular bank account. You can check your balance, send or receive money, and even connect to decentralized finance apps.
What is the best crypto wallet?
The best crypto wallet depends on what your needs are. Here are some options for you to review:
- Metamask
- Ledger Nano
- Exodus
- ZenGo
- Trezor One
- Gemini
When you start your research on which wallet to choose, remember to check the following:
- Backup options
- 2-factor authentication
- Multi-signature support
- Exchanges as crypto wallets
- Multi-currency or single currency
Finding the right option is all about getting convenience and security. If you're still unsure which crypto wallet could be best for you, compare features, pros, and cons.
If you are interested in entering the NFT market, ask the community to check on what other people are doing or their experiences with crypto wallets f. It is essential to figure out what you're looking for. Do you want to invest long-term? Would you like to send rewards for an NFT project? Are you just exploring the crypto space?
Metamask wallet
Choose a wallet that suits you
It all comes down to keeping your assets safe. It's very important to feel confident and understand the process and technicalities of where and how you'll store your crypto.
Security solutions grow in popularity and necessity. In the future, hopefully, there'll be more and better options. For some, cryptocurrencies can still be a complicated subject, yet with the right tools, it gets more accessible.
Do you prefer online or hardware wallets? Maybe both? Don't forget to drop us a line at @buenonft on Twitter, and let us know what your thoughts are on crypto wallets.
