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As the world grapples with economic instability and recession, investors constantly look for ideal ways to keep their money invested. Trading bitcoin and other cryptocurrencies has become one of the most preferred investment methods.
Most people see bitcoin as a private and secure currency, but it is not without risk. To successfully use bitcoin to keep your fund private and secure, users have to choose a suitable wallet to protect their finances.
If you are new to trading crypto and crypto wallets, here is everything you need to know about securing your cryptocurrency with a wallet.
What is a cryptocurrency wallet?
A cryptocurrency wallet is a type of software application where crypto traders can store their blockchain currency. Different cryptocurrency wallets can support different types of cryptocurrencies like bitcoin, litecoin, dogecoin, and etherium, while others only support one type of crypto, normally the bitcoin. With a crypto wallet, the cryptocurrency owner is the only person who can access the blockchain asset by use of decryption passcodes.
Since crypto coins are digital currencies, these wallets are a digital solution for securing and managing blockchain cryptocurrencies and assets.
These wallets store security public or private keys. The public key is a part of a digital code attached to a cryptocurrency equal to a bank account. A private key is also a part of a digital code unique to a person’s wallet, which can be compared to an ATM card pin. It is only with a private key that you can prove ownership of a crypto wallet.
Types of cryptocurrency wallets
Hardware crypto wallets are the most secure types of wallets used for storing cryptocurrencies. If you are more of a long-term investor, it is best to keep your coins stored in a hardware wallet. This type of wallet is a hardware device created with the ability to store public and private keys. They can be bought as USB devices that come with buttons and a screen for easy navigation of the user interface. They cost up to 150 dollars.
Hardware cryptocurrency wallets come with desktop support, making it easy to connect to a computer whenever you want to access the crypto wallet. Some of the most popular hardware crypto wallets include Trezor, Ledger, Safepal, and Cabot Vault. The latest hardware wallets can store more than 500 ERC-20 tokens and more than 22 cryptocurrency types.
While hardware wallets are the most secure option, they are harder to use than desktop and web options. They may also not be the best option for beginners, especially for significant investments.
Even though they are not as relevant today as they were ten years ago, paper wallets are the second most secure way of storing cryptocurrencies. To use paper wallets, you need to have a good understanding of how the technology works. To keep your crypto in a paper wallet, you first have to print the security key on paper before transferring the details to a paper crypto wallet in the form of a QR code.
Paper wallets are a type of cold storage method through which you can store your cryptocurrency offline. The main drawback is that most cryptocurrencies do not offer paper wallets as a storage option. Some paper wallets allow you to download the code to create addresses offline. While they are not prone to hacks, they are not the most preferred method today.
If you need to liquidate some of your bitcoin, you will need to invest in another paper wallet since it is impossible to reuse one or edit a QR code.
A desktop cryptocurrency wallet is a type of hot wallet and is the third most secure method of storing cryptocurrencies. Desktop wallets are available for different operating systems, including Mac, Windows, and Linux.
The main drawback of a desktop wallet is that it is stored in your computer, which is always connected to the internet. To securely use a desktop wallet, you need to ensure your computer is protected from all sorts of hacks. Ensure your firewall is always activated and that you have a strong anti-malware program in place.
Desktop cryptocurrency options include Electrum, Exodus and Bitcoin Core.
A mobile crypto wallet is a type of hot wallet and is one of the most commonly used options today. As the fourth most secure wallet option, mobile wallets are easy to use mobile-based applications. If you prefer to trade in the cryptocurrency market actively, a mobile wallet is the most recommended option. They are compatible with android and iOS.
A mobile cryptocurrency wallet is always connected to the internet, which increases the risk of use. Some of the most popular options include Coinomi, Trust Wallet, Electrum, Safepal, and Mycelium.
Web wallets or internet wallets are commonly used crypto wallets. These are also hot wallets ideal for people who actively trade in the crypto market and are recommended for anyone who wants to store crypto. As internet-based wallets, web wallets are the least secure options accessible through web browsers like Firefox, Internet Explorer and Google Chrome.
As online-based wallets, these are mostly targeted for DDOS attacks. Any crypto exchange platform is a type of web wallet. The most commonly used platforms include MyEtherWallet, Coinbase, MetaMask, CEX.io, and Binance.
When you choose to store your crypto in a web wallet, you will not have access to the security keys. Therefore, you stand to lose your investment if the exchange is hacked or shut down. Therefore, web wallets are only ideal for active trading. It is advisable not to store all your cryptocurrency on these platforms.
The cryptocurrency option you choose is determined by your needs. Ensure you backup your wallets regularly while using the latest software.