Without cryptocurrency wallets, digital currencies would just be another dead idea. Their purpose is to be used and be out there, while users need a way to access, store, send, receive and track their digital currency holdings whether it’s Bitcoin, Ethereum or any other tokens.
When it comes to options, there is a plethora of choices. This guide will walk you through all of them, so you can make informed decisions.
To begin with, a cryptocurrency wallet is a software program that is connecting the user with blockchain technology. As digital apps, cryptocurrency wallets offer many perks and combine all the advantages of a physical wallet with more sophisticated flexible features. One wallet can store hundreds of digital currencies without worrying about running out of space. All have designated sections, so they don’t get mixed up. Additionally, another useful feature is a balance checker that keeps track of crucial details such as when, where and how much was spent, added or withdrew. Some have the option to save a note next to any transaction for future reference.
Most coins have their official wallet, like Bitcoin or Ethereum. Yet, there are also third-party wallets. Since Bitcoin is the most popular digital currency, there are lots of crypto wallets offering services just for this currency. However, with the rise of altcoins, a majority of digital wallets will allow you to store multiple currencies.
There are different types of crypto wallets to choose from:
- Desktop – a user can download the wallet as an application and it can be used only on the computer it has been installed on. This type of crypto wallet offers the highest security level and there is no need for a browser.
- Online - this type of wallet is stored on a cloud and is easily accessible from any location or device. The problem here is that this service is controlled by a third party, thus there is a privacy concern. Also, a private key is stored on the wallet which makes it more prone to attacks and theft.
- Mobile - it can be installed on the phone and 3G connection is needed in order to access it and make transactions. Using this type of wallet on a public wi-fi can be troubling as it makes it more vulnerable to hacks.
- Hardware - with this wallet the user has to store the security keys on an USB stick or external device. Your cryptocurrencies are stored offline which increases the level of security. You will still need internet connection to transact.
- Paper - this is the least popular as the security level is low. The user needs to print public and private keys and the printout significantly decreases security of this option. In order to transact with a paper wallet, one will need a software wallet.
All crypto wallets have different layers of security in the form of a public and private cryptographic key. These two are of utter importance in providing safety for your digital currencies. The public key gives an address (long number combination) that other members can see and use it to identify you in case someone wants to transfer you funds. The private key is personal and not shared. Losing the private key is irreversible and there is no option to gain access to your funds anymore. The combination of both keys is required as a signature on a message that is attached to your transaction.
Among the most secure cryptocurrency wallets one needs to choose the most secure and the one suiting the needs. These are just a few popular options, but please make sure to do your own research:
- Coinbase is a popular digital wallet supported in more than 30 countries. Coinbase has handled more than $6 billion in cryptocurrency exchanges and is an industry leader for cryptocurrency exchange.
- Exodus offers a built-in ShapeShift exchange that allows rapid conversion between major cryptocurrencies and altcoins. Also, it can be used as a multi-asset wallet for desktop only.
- MyEtherWallet Web Browser is easy to set up on a web browser and the most popular due to its Ethereum infrastructure that supports altcoins based on ERC-20 protocol.
Summing up, cryptocurrency wallets are digital safety boxes for storing major cryptocurrencies, digital assets and ICO tokens. You can create one via a web browser, download one via your smartphone or purchase a physical one from an online store. Once you have your wallet set up and running, remember not to share your private keys with anyone, never lose them and store them safely in a location where you can retrieve on demand.
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