How Can I Choose The Best Crypto Wallet Available?
Choosing a reliable and great crypto wallet is just as important as investing in bitcoin. Many newcomers are flabbergasted with the sheer amount of information to grasp when it comes to cryptocurrencies and bitcoin.
Unfortunately, many newcomers resort to storing their crypto with the cryptocurrency exchange they buy from and never end up using crypto wallets. Although this is not per se wrong it leaves your crypto assets at risk of being lost especially if said exchange goes out of business and declares bankruptcy.
So What Are Crypto Wallets?
Simply put crypto wallets are a form of wallet separate from exchanges which allow you to store your crypto investments safely in a sort of digital safe. This is one of the best and safest ways to store your crypto assets.
By establishing a secure connection with the blockchain network, your crypto wallet of choice will allow instant token sending and receiving with all the benefits of blockchain technology.
Understanding The Different Crypto Wallets
With many different types of crypto wallets available, it’s important to note that some will focus more on security over convenience and vice versa. Some wallets will even act as exchanges with additional features which allow users to sell, buy and even trade crypto assets.
The most popular form of crypto wallets is mobile app crypto wallets which can easily be downloaded on modern smartphone devices. That being said there are several options to store your crypto on desktop software/ online exchanges and even hard wallets. Some of the best options for crypto wallets are enlisted by Business2Community accompanied by reviews and comparisons between each crypto wallet.
Understanding Custodial and Non-custodial wallets
Let’s start with the more popular non-custodial wallets. These wallets are limited to only one person with access to the wallet’s private keys and the backup phrases for the wallet. These offer the tightest form of security but it also has one major issue. One bitcoin owner whose story went viral after he lost his wallet password brought the issue in limelight.
Without the key or backup phrase, there is simply no way to access your crypto assets henceforth the importance of keeping the keys and backup phrase stored in multiple and secure places.
Custodial wallets on the contrary means you will not have personal access to your own private keys or phrases and thus you are ultimately trusting your funds with a third-party wallet provider, these are usually crypto exchanges or brokers.
This option is definitely more convenient at the cost of less security, that being said if you stick to trustworthy exchanges such as Binance which are regulated by tier-one licensing bodies it’s still a safe option.
Types Of Crypto Wallets
Crypto wallets have two main categories software wallets and hardware wallets. Cryptocurrency can be stored, sent, and received with the help of software wallets, which are merely apps for the desktop or browser add-ons.
Hardware wallets, on the other hand, tend to be similar to a Pendrive, although providing a similar service the hardware wallet will need to be inserted into devices such as a desktop or laptop in order to access your funds.
These two wallets are also commonly known as “hot” and “cold” storage. Software wallets are considered hot storage since the funds are kept online while “cold” wallets is the term used for hard wallets since the data is kept offline.
A hardware wallet as we stated earlier is a tiny device that typically resembles a Pendrive which allows you to store crypto offline. Hard wallets are considered the safest method for storing crypto since the signing in and out process is all done offline making it impermeable from hackers.
These wallets tend to go for around $100 dollars and tend to be a little more complex to use when compared to software wallets making them less convenient. Hardware wallets can communicate to a computer in 3 main forms.
- Company App operated through Bluetooth
- Online Based Interface
- A completely separate software wallet
Software wallets operate completely online and can be in form of a computer program or mobile app which holds the private keys online. Often these wallets are easier to use and make for a much more convenient option for the cost of a little less security.
These wallets are usually free to open and in return will charge small fees on transactions in and out of the wallet. There are also 3 main forms of software wallets.
- Online Based Wallets such as MetaMAsk
- Desktop wallets
- Mobile App Wallets
How To Choose The Best Crypto Wallet
When choosing your preferred method of storing your cryptocurrencies there are a few major factors one should consider.
Bottom of the line these wallets are used to keep the cryptocurrencies safe. If your looking for the ultimate safety your best and safest option would be the hardware wallet method. That being said security and convenience can be achieved through software wallets.
It’s essential to make sure when using a software wallet to have a prior line of devices on the device you are using. Make sure whether the app is on mobile or computer to have at least a pin or password to access the device.
Some software wallets even incorporate facial and fingerprint recognition to make access convenient while still offering a high level of safety.
Make sure the security method you choose is proven in combat. If you pick the first crypto wallet that catches your eye you might be leaving your crypto assets at risk of being lost. One can either check review sites or conduct research regarding the wallet, make a pros and cons list and compare the different wallets available and which best suits your needs.
Private Keys Access
Earlier we mentioned the difference between custodial and non-custodial wallets. Depending on the level of security you are going for custodial wallets might not be the best option. These wallets are generally considered unsafe since you literally are handing out access to your funds to a third party.
On the other hand companies such as PayPal have been doing this for years, hence it’s essential you pick a super trustworthy site if you decide to go this route. Perhaps the major and only benefit of using these sorts of wallets would be the ability to regain access to your account if you misplaced your backup phrase and key.
Do this mistake with non-custodial wallets and you can practically kiss your crypto assets goodbye.