How to Choose the Right Cryptocurrency Wallet
Even though cryptocurrencies are becoming more and more popular, the wild ride that Bitcoin and other cryptocurrencies are constantly on is turning a lot of people off. It’s one thing to imagine that you were cool enough to buy a bitcoin when it was worth a few dollars, and quite another to spend thousands of dollars only to see them magically turn into hundreds of dollars.
Of course, there are still good reasons to invest in cryptocurrencies. Bitcoin, Ethereum, and other crypto coins have shown a tendency to rebound in value after drops, making every drop a potential opportunity. And the possibility that cryptocurrency will someday become a truly anonymous currency is very attractive to many, plus the list of things you can buy with bitcoin and other currencies is constantly growing.
If you are new to crypto, you may not realize that you need a place to store your coins after you purchase them. Cryptocurrency is just decentralized computer code, and yes, you can store that code on an exchange like Coinbase or Robinhood , but storing your cryptocurrency on public exchanges puts your funds at risk because if the exchange is compromised (or collapses ), everything what you can do is wave sadly as your coins fly away, never to be seen again. It is best to put your cryptocurrency in a cryptocurrency wallet.
The difference between hot wallets and cold wallets
There are over 17,000 cryptocurrencies, which is a lot. There are not many wallet options for storing your cryptocurrency, but you still need to make some decisions.
A cryptocurrency wallet is not where your coins go, it’s just where your public and private keys intersect. They work in much the same way, using a system of public and private keys. When you send money to a public key, it publishes that transaction on the blockchain associated with that particular cryptocurrency. It is a public immutable record that governs the cryptocurrency. Then, in order to access the cryptocurrency in the wallet, you need your private key. It is important to note that no matter where you store your cryptocurrency, if you lose your private key, you will become what scientists call “Shit Out of Luck” (SOL).
There are two main types of crypto wallets: hot wallets, which are software-based and connected to the Internet, and cold wallets, which are not connected and often hardware-based (such as a physical key or disk). Hot wallets are slightly less secure but are suitable for daily transactions. Cold storage provides an extra layer of security: even if hackers know how to steal your cryptocurrency, they will need physical access to the wallet to even try (and even if they do steal the physical wallet, without your private key, your money is safe). But the downside of a cold wallet is the delay and issues associated with accessing your cryptocurrency.
In fact, the ideal cold wallet is what is known as a paper wallet , which is simply a piece of paper with public and private keys printed on it. This is not very convenient, and if you lose a piece of paper, you are finished, but, on the other hand, no one has yet figured out how to transfer a piece of paper over the Internet. Some investors use both hot and cold wallets: hot for daily transfers, cold for long-term storage of coins.
If you decide you need a cold wallet, your best bet is probably the Ledger Nano X. It works with over 1800 cryptocurrencies and is easy to use. You can connect it to your computer via USB or Bluetooth, making it a handy cold wallet. Nano X combines solid security with an interface that is easy to navigate and use, so you can spend more time gazing in horror at your crypto positions collapsing and less time trying to figure out how to sell it all before it gets too much. late.
Other cryptocurrency wallets
If ease of transactions and freedom from physical objects are important to you, a hot storage wallet is for you. Which wallet you choose depends on what you want to achieve:
- Starting out. Is this your first crypto rodeo? Are you trying to figure out what it’s like to watch the value of your investment skyrocket and fall in dizzying fashion? Then the best choice for a hot crypto wallet would probably be Coinbase Wallet . This is a wallet offered by the Coinbase exchange, which is the most established exchange on the market, but you can use the Coinbase wallet without a Coinbase account. It supports over 500 cryptocurrencies and is easy to use. Since this is offered by Coinbase, it’s reasonable to expect that if something happens and your coins are stolen, you’ll get them back – and while their customer service isn’t always the best, they do have customer service.
- Safety. If you’re most worried about a cold wallet rather than waking up to find that the Russian mafia has stolen your coins, the Trezor Model T is one of the safest wallets out there. Supporting over 1,600 coins, Trezor has two distinct advantages: First, it’s open source, which means its code is available for review, making it less likely that there’s a dirty trick lurking there. Second, it runs as a native application on your desktop computer, not as a web application, which eliminates one level of potential vulnerability.
- Only for mobile devices. If you’re that cutting-edge person who does everything on his phone or doesn’t do it at all, Mycelium should be your hot wallet . The mobile platform is inherently less secure than any other platform, so Mycelium’s emphasis on security and transparent code (which can be verified and replicated) is a huge advantage. It also allows you to temporarily disable outgoing transactions, which is a great feature if you’re planning on moving away for a bit.
There are about a hundred crypto wallets on the market right now, so you have a lot to choose from. If you’re just getting into it, you can start with a Coinbase wallet and transfer everything if and when you decide you need a different wallet. Ultimately, choosing a wallet offered by a reputable, well-established company is a key first step.