If you’re planning to dive into the world of cryptocurrency, before you even decide what coins or projects you want to invest in, you’re going to need a cryptocurrency wallet.
A good cryptocurrency wallet will let you organize your cryptocurrency portfolio. Every wallet comes with a private key that only allows only you to access the contents of the wallet.
Cryptocurrency wallets allow you to securely send and receive Bitcoin, Ethereum, and other types of cryptocurrencies.
There are several types of wallets, including mobile and desktop apps, and hardware wallets that look like USB sticks. There are variations between each type, but all function in a similar manner by storing private key pairings that allow you sync your wallet across multiple devices for ease of access and usage.
The first step on any crypto journey should be setting up and becoming familiar with your cryptocurrency wallet.
Cryptocurrency Wallets Explained
Cryptocurrency wallets don’t hold any cryptocurrency. Instead, it holds the public and private key information needed to carry out crypto transactions. The coins themselves are stored on the blockchain, the digital ledger that is the foundation of how decentralized cryptocurrencies work.
There are two types of keys used by cryptocurrency wallets: Public and Private keys.
Public keys could be compared to your regular bank account number. It appears as a string of random numbers that can be shared with third parties such as a cryptocurrency exchange without compromising the security of your wallet. This key allows you to receive cryptocurrency or other blockchain assets by using the wallets address. A wallet address is oftentimes a compressed version of the public key.
Private keys, as the name suggests, should always be kept private – under no circumstances should these be shared with anyone or any entity. Your private key allows you to access your cryptocurrency on the blockchain. If somebody has access to your private key, they have complete access to the contents of your cryptocurrency wallet.
Sending cryptocurrency between wallets is simple. Once your know the recipient’s wallet address, you can send it to that address from your own wallet.
Beyond software and hardware wallets, cryptocurrency wallets can fall into other categories.
Hosted wallets are the most popular due to their simple setup process. These are “hosted” directly on an exchange where you buy your cryptocurrency, and so might be referred to as “exchange wallets”. Coinbase and Kraken are two popular exchanges that use hosted wallets.
Sometimes hosted wallets can be restrictive in terms of what cryptocurrency you can buy, send, and receive with them. The exchange in question may not trade with a particular cryptocurrency, especially those under a dollar. The purchase of digital assets, such as NFTs, may not be possible with a hosted wallet either.
Hosted Wallets are also somewhat vulnerable to hackers. If a hacker breaches an exchange, they can access the private keys attached to a hosted wallet.
On the plus side, if you forget your login details an exchange will be able to retrieve them for you, so in that regard, you don’t need to remember a private key.
A Non-Custodial Wallet allows a user to have complete control over their cryptocurrency, with zero third-party involvement. They offer freedom over hosted wallets, and you can use them to purchase NFTs or get into staking.
The only way to access a non-custodial wallet is to use your private key. If you lose access to your private key, it is impossible to access your non-custodial wallet.
Non-Custodial wallets offer a more libertarian approach to wallets as they put complete ownership and responsibility into the hands of the user.
Hardware wallets offer an ‘off-the-grid’ approach, and are also known as “cold wallets” or “cold storage wallets”. They are physical devices that look similar to a USB stick. Your private key is stored on the device.
Because a hardware wallet is not connected to the internet, it is by far the safest way to store cryptocurrency – hackers have no route in.
If you lose the physical device, you will need a recovery seed to access your private keys. If you cannot remember the seed, the cryptocurrency cannot be accessed.
Types of Software Wallets
There are a few types of software cryptocurrency wallets that you can access across your devices.
Desktop wallets are apps that run on your computer and store cryptocurrency. There is no third party involved, and so you are responsible for the security of it. For this reason, you’ll need adequate protection for your wallet, like SaferNet.
Similar to desktop wallets, a mobile wallet is an app on your phone. There are many available on the App Store and Google Play store. Many use QR codes which can be scanned for quick transactions as well as making payments in person at stores that accept cryptocurrency. These can also be vulnerable to attack and should be protected by a security application such as SaferNet.
Web Wallets are functionally similar to Desktop and Mobile wallets, but act within a browser. By their nature, they are more open to attacks from hackers.
Choosing A Cryptocurrency Wallet
Your choice of cryptocurrency wallet depends on your needs and your level of activity with cryptocurrency. There are five areas of concern:
Security – Like banking apps, a wallet should have robust security. Each wallet has different security, so it’s important to check these before making a choice.
Fees – Transaction fees can vary widely just like with banks. Ensure your fees are low or you may regret it in the long term.
Cryptocurrencies – As stated previously, some wallets do not allow certain cryptocurrencies. If you’d like to invest in altcoins, make sure to do your research beforehand.
Customer Support – Many companies now offer 24/7 support as part of their service. Review the level of support you get before making a choice.
Access – Where do you trade cryptocurrencies the most? At your desk? On the move? These factors are key in deciding what type of wallet suits your needs.
Like choosing a bank, choosing a cryptocurrency wallet is something that is best researched beforehand. Choose wisely!
Protecting Your Cryptocurrency
Cryptocurrency and the blockchain stand to be a major driving factor in the technology of the future. However this popularity has attracted an element of cybercrime. There are several tools internet users should use to increase their online protection. One of these tools is SaferNet.
SaferNet is the perfect solution to the cybersecurity issues that individuals, families, and businesses face today. It not only connects every device using a secure, 24/7 always on, military grade VPN, but it also stops outside cyberthreats, malware and viruses as well. On SaferNet, all users are protected anywhere in the world, all the time, on any cellular or Wi-Fi network. In addition to SaferNet’s VPN and cyber protection, it also offers a range of employee or parental/family internet controls including internet filtering, monitoring, scheduling, and blocking access to websites or even entire website categories
Typically, a user would need 3 separate services for a VPN, Malware Protection, and Internet Controls; SaferNet offers all 3 features in one service. SaferNet truly is an endpoint security presence that can be implemented in minutes around the world, on phones, laptops, tablets, and computers at an economical price point that caters to all internet users. SaferNet guarantees a smooth setup and installation process that takes only minutes, and an easily accessible control hub for you to monitor all your employee’s or family members devices; including activity, time spent online, and threats blocked.