Everyone who has decided to buy cryptocurrencies should also choose a cryptocurrency wallet. Just like with real money, we do not carry coins and banknotes loosely in a pocket or bag, only well placed in a wallet that we keep in a safe place. In the real world, we have a whole range of wallets: leather and material, vertical and horizontal, fastened and not fastened, various shapes, colours, multiple manufacturers. Likewise, there are many types of wallets in the world of digital currencies, and each category has different products to offer. So how do you choose a cryptocurrency wallet? What is the best cryptocurrency wallet? Which one is the safest? Below is a brief description of the most popular wallets on the market.
Wallet on the cryptocurrency exchange
Cryptocurrency exchanges call “wallets”, places where we can see the current account balance of our cryptocurrency or fiat currency. These “wallets” on crypto exchanges are only for ongoing operations and short-term storage of funds. They are the least safe form of keeping. If you are interested in short-term trading (day trading) and you want to earn even on small differences in exchange rates, you buy – you sell, you buy – you sell and in this way you try to increase your capital, and you have no choice, these “wallets” are the most suitable and you must accept this type of risk. However, if you are thinking about buying and keeping bitcoin or ethereum in the long run, leave the cryptocurrency exchange – you must be aware that the cryptocurrencies on crypto exchange are owned by the crypto exchange instead of you and if there is a problem on the horizon (e.g., hacking attack on the cryptocurrency exchange) then you cannot get your money back.
Desktop Crypto Wallet
There are also dedicated software that we can download and install on a computer, and it is called “desktop wallet”. Such applications are intuitive and very easy to use, and above all are perceived as one of the safer storage options. The main disadvantage of the solution lies in the fact that each wallet is dedicated to the storage of one currency. This is a big obstacle for most investors who want to buy different cryptocurrencies.
Desktop wallets are divided into full and lightweight. The lightweight ones are those in which the blockchain is stored on external servers and is characterized by speed and availability. The full ones download the entire blockchain to the computer, which results in longer synchronization time and larger disk needs.
Mobile Crypto Wallet (Wallet on your smartphone)
A wallet in the form of an application for a phone or tablet. It’s the perfect solution for people who love bitcoins, so they pay in them too. The portable wallet on your smartphone allows to be independent, make transactions in shopping malls, stores, restaurants, etc. by scanning the QR code. The level of security should be defined as a medium, and mobile wallets are not recommended for storing a larger sum of cryptocurrencies.
Online Crypto Wallet (Web wallet)
When we’re looking for the right wallet, we come across many sites on the internet that offer to deposit funds on their servers. They are so-called online wallets or web wallets. It is a simple solution in which, as the name says, funds are stored online. We have access to the wallet from both a computer and a mobile device, and it is done via a browser.
Admittedly, they are very convenient to use, however, we must know that online wallets do not provide an adequate level of security.
Let’s also remember that by choosing an online wallet, we give the website owner permanent access to our account, and in rare cases, we may lose control over our currencies. This is the analogous situation, as in the case of a traditional bank, but in this case, the owner is not subject to the supervision of control bodies and state offices. These are good only for a short period to store a small number of funds.
Paper Crypto Wallet
A paper wallet is a form of a cold wallet where we store funds offline. This type of wallet is nothing more than a piece of paper on which we print our public key and private key. Keys are also printed in the form of QR codes that facilitate the transfer of cryptocurrencies. We should secure the paper wallet, preferably keep it closed, do not share it with anyone. It will be a good idea to make a copy. A certain advantage of such a wallet is the fact that it is free and no one but us has access to it.
Hardware Crypto Wallet
A hardware wallet is the safest and thus the best cryptocurrency wallet ever invented. It’s a portable device that looks like a pen drive. Depending on the manufacturer and the model, the hardware wallets differ among themselves in appearance, operating principle, security level, number and type of supported cryptocurrencies, additional functions, and price. Why are the hardware wallets the safest? First of all they store private keys (you are their owner, and only you have access to them), secondly they are not permanently connected to the internet (hackers are in no way able to steal data stored offline), thirdly it is possible to backup (even if you lose your wallet or it will be stolen, you will be able to recover the cryptocurrencies – the thief will not be able to access them due to pin security). If you are planning a long-term investment or with a more significant amount, then you should buy such equipment.
Which cryptocurrency wallet to choose?
In summary, one can say that one of the essential investment rules is – diversify – it is worth moving to the cryptocurrency area. Professional traders, do not keep all their cryptocurrencies on one wallet, but instead use both hardware (and different ones, Ledger and Trezor), desktop and paper wallets. In the world of cryptocurrencies, is not only the ability to generate profits important but also the ability to ensure the safety of your funds.