Everything you need to know about crypto wallets

Crypto has got a lot of buzz today and you might have heard about crypto wallets too. However, when you try to buy cryptocurrency from the exchange, there is absolutely no need for a wallet. So, you might be wondering what are these wallets for and why people are talking about it, right? Therefore, this guide will cover everything you need to know about crypto wallets.

What are crypto wallets?

Crypto wallets are a more secure way to store your crypto. As the name says, it’s a wallet that stores your cryptocurrency. Modern wallets not only allow you to store the currency but you can also convert, send, and receive the crypto from the wallet itself.

There are mainly two types of wallets.

· Software wallets

· Hardware wallets

Software wallets are wallet that is available as a web-based program, software, or mobile app. Most of the wallets have all the things combined along with a browser extension. So, one can easily make the transactions.

On the other hand, hardware wallets are more secure as compared to a software wallet. Here, you will have hardware that will store your cryptocurrency in it. You can keep the hardware wallet safe in a locker and there will be no worries about getting hacked.

Depending on what you like, you can choose the wallet.

Now, many people will be thinking about whether they need a wallet or not.

Let’s learn more about it.

Exchange vs Wallet

A wallet is a more secure way of saving your cryptocurrency. However, for most people, it’s not the best way.

If you have a very small amount of crypto, you can always go with the exchange instead of a crypto wallet. Crypto wallet works on the technical mechanism.

Let’s see all the things that you need to know about it.

Security

There are 13 words generated by the computer which will be your username. Along with this, there will be a password that you will have to set. Once you set these two things, your wallet will be created.

In case, you forget one of the words, your money will be gone. There is absolutely no way you can get the crypto back. Therefore, for retail investors, wallets are not the best way to store crypto.

Privacy

No doubt, wallets are more privacy-oriented than an exchange. You don’t need to worry about privacy as there is no third party that has access to your data.

In case of an exchange, the exchange team will have the access to all your data. Therefore, it’s no privacy. Along with this, the government can also ask for the data from these exchanges. You can read more about the terms and conditions from their official terms and privacy pages. This is how you will get a complete idea about privacy on an exchange.

Ease of Usage

We will now talk about the ease of usage. Unless you are transacting in crypto everywhere, the wallet won’t be of great use. No doubt, it’s easy to use crypto-wallets. However, if you want to use it for fiat currency, there are many issues that you will face.

Modern crypto wallets allow buying the currency through the wallets but it will still take you some time to know about it.

Should you be using crypto wallets?

Let’s see the showdown. Whether you should be using the crypto wallets or not.

The exchanges are the best way to buy and sell cryptocurrencies if you are a retail investor or only buying them for trading.

On the other hand, if you are using it for buying or selling NFTs, you will need to go with the wallet. As this is the only way to transact.

We can say that if you are paying someone using cryptocurrency, you will need a wallet. This is the only way using which you can make crypto transactions.

Final Words

To conclude, this was all about crypto wallets. If you are not buying stuff using crypto, you don’t necessarily need crypto wallets. However, you can surely create an account and try it yourself to see if it works for you. It’s good to know about the technology and how you can store money in your wallets.