If you’re interested in investing in cryptocurrency or have invested in the past, you know how essential it is to have a crypto wallet in order to do any trading of digital assets. In fact, without a crypto wallet, it is literally impossible to do cryptocurrency buying or selling.
These wallets, sometimes referred to plainly as Bitcoin wallets (even though they store a variety of different digital tokens) are crucial to store crypto securely, as well as validating and authenticating person-to-person transactions. Security when it comes to digital transactions using unregulated currencies like any cryptocurrency is one of the biggest fears that new investors have, and by using a secure cryptocurrency wallet, you can trade in safety and comfort.
But how exactly do these crypto wallets work?
In the simplest of terms, a crypto or Bitcoin wallet is held on an app or website and it allows you to store your cryptocurrency using secret keys and cryptography. Crypto wallets typically either have a public key or a private key and in most instances, both.
The public key acts as a faux bank account number as it contains a long sequence of differential and randomly generated characters that are used by buyers and sellers to send and receive crypto from your digital wallet. Each holder of a wallet has their own public key that is completely distinct from any other user’s wallet key. The private key is one that is owned by the user themselves, and it provides complete and utter custody and sole ownership over the crypto wallet – in other words, you can completely control what happens with the funds in that wallet.
Crypto wallets play a variety of different and important functions including:
Wallets that deal with cryptocurrencies with different levels of security and ease of use – of course, to accommodate the varying levels of crypto investors. For investors that are veterans and want a bit more freedom in terms of how to handle their own public and private keys, perhaps a certain type of wallet may work better for them. Whereas a newcomer, who doesn’t know exactly how crypto trades work, may want an easier to use wallet that doesn’t take too much effort on their part, as well as being completely secure for ease of mind.
There are two main types of cryptocurrency wallets – namely cold wallets and hot wallets. One is more suited to beginners who need security and one is more suited to the veterans of cryptocurrency investing.
So, starting with the wallets for experienced cryptocurrency investors or experts in the industry – these are highly recommended for users who want complete freedom in terms of how they deal and trade in the cryptocurrency they own. The first thing to note about cold wallets is that they are completely disconnected from the internet. Now, that might sound ridiculous, especially considering the fact that they deal completely in digital assets and online tokens. So, how does that work?
Cold wallets are also referred to as hardware wallets because there is an actual physical component to the storage of crypto using this medium. Basically, a cold/hardware wallet stores the private key on a singular physical device, rather than in an online user-created profile. This makes cold wallets far more secure and keeps hackers out – but increases the risk of investment loss, especially if you’re not great at keeping your physical possessions safe.
In contrast to a cold wallet, a hot wallet is always connected to the internet and requires minimal effort to maintain or keep secure. Of course, being connected to an online platform makes these types of wallets slightly susceptible to online hackers and digital attacks, but the platforms and crypto exchanges, like Binance or Kraken, are generally extremely safe and secure to use. There have been instances of hacks but in reality you should be completely safe using a hot wallet.
Buying crypto using a wallet is extremely simple. By following these steps, you will be able to buy, sell, and trade crypto out of your crypto wallet with ease.
It may sound surprising, but despite being entirely digital, all holders of significant amounts of cryptocurrency should secure a safe physical storage facility for their mined or owned coins. All crypto holders should consider cryptocurrency as a physical commodity that can be stolen or broken if not securely or safely stored.
In terms of physical storage, backups like external hard drives and USB drives are a good way to keep your crypto investments extra safe. In terms of online or digital storage, there are a number of secure online wallets that you can use to store your digital currencies.
The main platforms to buy and sell cryptocurrency are known as crypto exchange platforms, and there are many for you to choose from should you want to start investing or trading. You’ll need to choose one before you start buying and selling.
Every major crypto exchange platform like Binance, Kraken, and Bitfinex all stock various coins for you to buy, sell, and trade in a secure environment. In general, when looking for the best crypto exchange platform, it’s best to go for one that offers low account minimums and low trade fees. You can even look for some alt platforms that operate free of charge.
Once you’ve chosen a crypto exchange platform it’s time to set up an active account before you start trading. You may be asked for information like your ID number, bank account details, and more, but this is all part of a verification process that’s designed to keep you safe and reduce the chance of scammers taking advantage of the services the platforms offer.
After you’ve set up an active account on a trading platform, you need to deposit fiat currency straight from your bank account into the crypto wallet. These wallets are highly secure, especially when you’re using a trusted exchange platform.
Once you have a positive balance in your crypto wallet, you’ll have a choice of many different cryptocurrencies. You can choose from popular options like Bitcoin and Ethereum or Dogecoin, or opt for more obscure crypto coins like Shibu Inu. Browse your purchasing options base on the balance in your wallet to ensure that you remain in the affordability range. When you’re ready to buy your balance will convert when you make the purchase and you can monitor the market value of the coin until you decide to sell it.
Issues around regulation and safety are the main reason that many people avoid investing in crypto. But these issues are largely unfounded. Although cryptocurrency trading is still largely unregulated on a global scale, there are safeguards in place and state of the art security, encryption and blockchain technology offer more than adequate protection. In fact, most crypto wallets are more secure than the average bank with an online portal or app.
Because cryptocurrency is unregulated and not controlled by a single entity such as a local government or a bank, many crypto exchange platforms are privately run. Platforms like Binance and Kraken are safe and secure as they implement many digital safety measures to ensure that your online wallet and digital currencies are well protected from hackers and scammers. If you’re using a trusted crypto exchange platform, cryptocurrency trading is generally a safe bet.
Many of the crypto exchange platforms adopt a two- or multi factor authentication process that requires once-off security codes to be entered in order to access a crypto wallet. As the wallet holder, you have access to your wallet, but any third party cannot simply log in without completing the two part security check.
So, now you know everything there is to know about crypto wallets, how they work, the different types, as well as how to deposit funds into your crypto wallet and start purchasing digital assets at will.
But now it’s actually time to look at a few options in terms of the best wallets on the market. There are plenty of wallets, we’re talking thousands here, that are available online for you to make use of, so dwindling this list down to three has been a challenge. However, the three wallets that we’ve picked are all extremely secure, easy to use, and provide a number of unique benefits that many other crypto wallets on the market simply cannot match.
Let’s go through the three best crypto wallets for both beginners, intermediate, and veteran crypto investors.
Even if you’re not an avid crypto investor or expert in the field, it is more than likely that at some point you have heard of eToro as this company has experienced massive growth since cryptocurrency investments started hitting the mainstream financing world.
eToro is a multi-asset trading platform, meaning that it is not only used for trading, buying, and selling various types of cryptocurrencies, even if it is extremely proficient and performing that role. The platform also provides users with a secure, free-to-use crypto wallet in order to trade all of the crypto types held within that same platform. The security features used by eToro are simple but effective, and the platform has had no major scandals when it comes to breaches of security. Other pros include:
So, while eToro is perfect for beginners who want to avoid the more technical side of crypto investments, Coinbase provides a wallet that is a bit more tailored to those who want to start getting in-depth with their investments.
In more specific terms, the Coinbase wallet provides users with a self-custody wallet that enables owners to interact with various decentralized blockchain protocols and completely control the funds and digital assets that belong to them. This allows them to work with their trades more proficiently and actually use the technical skills that learned throughout their crypto journeys. Other advantages include:
And lastly, the perfect crypto wallet for experts in the industry. This is a technical platform that will simply make no sense to beginners or those who haven’t taken the time to learn about the complexities of cryptocurrency investments and blockchain technology. This is a hardware wallet that requires authorization on your physical device. Other pros for experts include:
You now understand the essential importance of a crypto wallet in making any type of digital asset purchases, sales and trades. You also have some great options to try out, depending on how much you understand about cryptocurrency investments.
Only ever share your wallet address and neve disclose your wallet key.
Yes, unless you are mining Bitcoin yourself you’ll need a wallet to store and trade this cryptocurrency safely.
It’s recommended that beginners start with a custodial wallet like eToro.
An exchange wallet gives the company and the wallet owner access to the assets, whereas a personal wallet can only be accessed by the person who holds it.
