A COMPLETE GUIDE ON GETTING THE BEST CRYPTO WALLET
A bank helps us to save our money, assets, documents, etc. However, with the emergence of digital assets in the form of cryptocurrencies, nfts, egold, etc, a safer means of storage is required so as to facilitate safety and easy movement of these assets from one source to another, especially knowing that they are digital goods, which can not be physically carried thereby, giving rise to a crypto wallet.
What is crypto wallet?
Just like the regular pocket wallet that you carry about, a crypto wallet is a storage device, which can either be in the form of a hard drive or an app,which renders the services of storing the public and private keys for crypto transactions, encrypting and signing information thereby executing a smart contract, a cryptocurrency transaction identification or legally signing documents just like the traditional way or analogue way.
In simple terms, a crypto wallet is an app or device that allows cryptocurrency users to store and retrieve their digital assets. Just as with conventional currency, you don’t need a wallet to spend your cash however, it helps to keep your money / assets all in one place.
Types of Crypto Wallet
There are several different types of crypto wallet with major difference in their accessibility, mobility and security ratio. In the course of this article, we shall focus on the two main types of wallets, namely:
- Hot wallet and
- Cold wallet
What Is a Hot Wallet?
A hot wallet is a kind of crypto wallet that allows you to view how many tokens you have as well as send and receive cryptocurrency. It is always linked to a public and private key which acts as a security measure and facilitates transaction processes.
A hot wallet is always connected to the internet and cryptocurrency network which makes it easily accessible for transactions but susceptible to hacks especially when your private keys are exposed.
Hot wallets usually come in the form of apps or web and Just like you visit the banks to open a new account, that is the exact same way you download the wallet, install it into your device and get ready to start creating your wallet / account.
HOW TO CREATE YOUR WALLET
To create wallet, you do not need a name, password, email or the likes of it all. This is because, a key will be assigned to you directly from the ecosystem. These keys are the public keys and the private keys
The public keys are similar to account usernames or account number, which allows the user to receive cryptos without revealing their identity while the private keys is like a personal ID number assigned specifically to you, to show that you are the owner of the account /wallet. It allows you gain access to your wallet, perform transactions, check balances, and more. This private keys is specifically for you and must be highly protected.
So, to create your wallet / account, all you need to do is to copy the keys out, reinstate it where needed and then store the keys you copied in a safe place. This process should take less than 2minutes and you will have your crypto wallet ready for use.
Hot wallets are always connected to the internet which means that you cannot operate them without the use of the internet. Also, they are designed to get access to cryptocurrency infrastructure so as to enable and update all transaction records kept on the decentralized blockchain ledger for whichsoever cryptocurrency you’re using.
Types of Hot Wallets
Just like i mentioned earlier, hot wallets come in the form of apps and web wallets and there are a variety of hot wallets available of which many of them are free to download.
Some wallets are designed specifically for a particular kind of crypto or ecosystem, while some others utilize a host of many other cryptos. Also, many cryptocurrency exchanges only accept transfers to and from specific wallets.
Few examples of hot wallets includes: Keplr wallet, coinbase wallet and edge wallet, etc.
Kepler wallet is designed for transactions using the cosmos ecosystem, Coinbase Wallet is the wallet for the cryptocurrency exchange Coinbase and Edge Wallet is designed to accept transactions using all of your digital assets, etc.
Knowing that wallet developers have varying degrees of expertise, commitments to security, privacy, and purpose for creating a particular wallet, it is important that you do your proper research before downloading and using a wallet.
Cold wallets also referred to as cold storage, are devices or applications that store your private keys offline —
Cold wallets are basically, specific variations of cryptocurrency wallets that are designed for cold storage. Cold storage simply means that the wallets store the crypto tokens in offline mode. As a result, they serve as storage vaults. It is also fascinating that some cold wallets connect to the internet even while retaining their basic working functionality.
These cold wallets can either be an application on your device that doesn’t connect to the internet or a device that looks like a USB drive that stores your keys. Examples of cold wallets includes: Ledger Nano X , Exodus, Trezor Model T, etc.
To use the cryptocurrency you have in cold storage, you need to transfer them to your hot wallet. This is considered to be one of the safest methods for protecting your digital currency and improving security. Therefore, a combination of both cold and hot wallets could present better value for crypto users.
Your cryptocurrency can be only safe depending on the way you use it. Being online makes it vulnerable to attacks so, its safety and security depend upon how you protect your public and private keys
Some tips on how to keep your cryptocurrency safe:
- Only keep small amounts in your hot wallet and ensure you enable a transaction password
- Always keep the software up to date
- Copy out your seed phrase and store it in a secure location.
- Avoiding clicking on unknown links as it could be a phishing site to monitor and hack your wallets
- Do not save your seed phrase on your email or device. As it can be traced or hacked.
- Always use cold wallets to store large sums of crypto tokens
And just as the saying goes, “ Do not keep all of your eggs in one basket”, this also applies to cryptocurrency. It is always better to use more than one strategy or storage type. By doing so, you minimize the risks of theft and loss.
About the Author
Igwe Ihuoma Patience is a self-taught creative and industry specific content writer, cryptocurrency enthusiast with 2years plus experience and knowledge of the constantly evolving blockchain space.
I am skilled in content creation, copy writing, curating captions, video editing & graphic designing with mobile phones and I teach others how to get started in the cryptocurrency and blockchain space and My goal is to make blockchain learning and updates easy for everyone and anyone to understand.