Crypto-wallet Guide

A small guide we put together on different types of cryptowallets

What is a crypto wallet? 🤔

To keep it simple, a cryptocurrency wallet is a piece of software that stores the private and public keys to your cryptocurrency. Cryptocurrency wallets interact with the blockchain to send, receive, and keep track of cryptocurrencies.

How does it work?

Unlike your traditional paper wallet, a crypto wallet only stores private and public keys. Crypto wallets work like a safe, where the private key acts like the combination to gain access inside the safe. Just like you protect important combinations and passwords you should avoid sharing your private keys, to prevent losses of your crypto-assets.

Different Types of Wallets

Depending on your needs there is a variety of different options for cryptocurrency wallets, here are a few to start:

1. Exchange Hosted, ex: Coinbase

An exchange hosted wallet is one that is created for you upon signing up for an account with a cryptocurrency exchange.

Security: Coinbase offers free wallets that use cold storage, meaning your funds are stored offline, making it very secure.

Pros:

  • Accepts fiat (USD) deposits,
  • Very secure if funds are stored offline
  • Easy to use
  • Convenient for selling sending, receiving, selling funds
  • Insured depending on exchange

Cons:

  • You don’t hold your private keys
  • If the exchange gets hacked (mt.Gox) you can lose all your funds

2. Online, ex: blockchain.infofor Bitcoin or myetherwallet.com for Ether and Metal for ERC-20 Tokens

An online wallet runs on the cloud and stores your private keys for you online.

Security: Both are very secure and have multiple layers of protections. Myetherwallet is not hosted on a server adding an extra layer of protection to your ethereum assets.

Pros:

  • Easy to use
  • Access to your private keys
  • Convenient

Cons:

  • Private keys are stored online

3. Paper wallet, is a document containing your private access

Security: This is determined by how safely the paper is stored

Pros:

  • Your BTC balance won’t be available for somebody to look up by typing in your wallet address

Cons:

  • Depending on where the paper wallet is stored it can be easily lost. Once you lose your private keys, they are nearly impossible to recover.
  • Can be physically lost or stolen

4. Hardware Wallets, ex: Trezor and Ledger

A hardware wallet stores your private key on a USB or other hardware device.

Security: A hardware wallet is one of the most secure options since your private keys are stored for you offline. Hardware wallets support multiple cryptocurrencies and can be connected to a variety of interfaces online.

Pros:

  • Most secure option
  • Password protected
  • Funds stored offline

Cons:

  • Not free
  • Can be physically lost or stolen

Which wallet does Crumbs use?

Crumbs uses a highly trusted exchange based cold storage system meaning your crypto-assets are stored offline, providing you with an additional layer of security.

Which wallet is the best choice?

It comes down to personal preferences and what works best for you. You can compromise security for convenience/ease of use or give it up in favor of additional security, it’s up to you.

If you have any additional questions about crypto-wallets feel free to reach out to us: hi@crumbsapp.io

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