What to look out for when choosing a crypto wallet?
So, you decided to join the world of cryptocurrency but can’t choose a crypto wallet to safely store your assets?
There is a variety of crypto wallets, but don’t get overwhelmed, it's rather easy to choose the most suitable for yourself. It’s important to search based on your goal.
Main aspects you should look out for are
- Reliability
- Safety
- Ease of use
- Supported coins
- Licences
- Commissions
- Extra services
We are going to cover the basics for you.
What is cryptocurrency?
Cryptocurrencies differ a lot from fiat currencies. First of all, they are not «official» as EUR or USD and are not available in any physical form. Crypto is controlled only by its users, no banks, no credits, no central reserve. There is only blockchain with a complete and unchanged record of every transaction that has ever been made.
Furthermore, there is a lot of different kind of cryptocurrencies, but the main two are Bitcoin and Ethereum.
What’s a crypto wallet?
According to good old Wikipedia — a device, physical medium, program, or service which stores the public and/or private keys and can be used to track ownership, receive, or spend cryptocurrencies. The wallets allow you to buy, convert, store, and trade your crypto assets. Some wallets allow you to work with a large number of cryptocurrencies. Others offer other types of cryptocurrency assets.
The main two types of crypto wallets are software and hardware type.
- The software comes in the form of an app that can be installed, either on your computer or mobile, or they can be online. They are counted as the fastest way to create your own wallet for storing cryptocurrency but it can be difficult to restore the access to the wallet if you lose the credentials. Online and software wallets are also most prone to hacking.
- Hardware wallets can be USB flash drives or even pieces of paper with codes written on them, whichever suits you. This is one of the most reliable methods since each transaction is confirmed directly from the device that guarantees a high level of protection. Hacking risk is very low but still possible. At the same time, this option is not suitable for daily use as you must constantly carry the device with you and connect it to your computer.
Given the widespread use of smartphones daily, app wallets are the most popular option for most people. And, they are more secure. Just don’t break or lose your phone.
Commissions
Keep in mind, crypto wallets operate on fees. They vary a lot. It’s important to understand what exactly are you paying extra and not more than its needed.
Overall, the fees are similar to the ones you are used to in fiat bank transactions, but they differ in implementation.
The fee is calculated depending on the currency.
For example, in Bitcoin, it depends on the number of addresses involved in the transactions. For Ethereum the fees depend on the level of calculation of certain transactions. Each transaction is essential to provide a reward for maintaining the network
Custodial and non-custodial
Custodial wallets store is where your private keys are stored by third parties, meaning that you don’t have full control over your funds, which already sounds scary. The only good thing we can think of is that is quite fast and easy to manage your funds and no chance to lose your private keys.
To cut the chase, they work very similar to how a bank works — while the money is yours, the full control over it is in the hands of others.
As you may guess, a non — custodial wallet is the complete opposite. You are the owner of your private key, password, and the only owner of your wallet and money. No third party involved.
And this is the main reason why we made our Raison wallet non — custodial. Almost all of the major cryptocurrency exchanges hold custody of user funds–you send the virtual currencies to the wallets owned by the exchange.
With Raison each customer is the owner of the private keys and the owner of the wallets and therefore the money inside. We built a system that does not require 100% trust in a third party to hold custody over your crypto assets. In the core of this system is a usage of a private key that is fully encrypted and known only by the customer.
No one except you is the owner of your password and your private key, and two-step verification for transferring virtual currencies assures the safety of all your crypto assets in Raison.
Licenses
Regulated financial institutions offer their services in accordance with governmental regulations.
For example Raison is working under EU and US legislation. This licence allows the wallet to be non custodial.
You get the assurance that an exchange order is executed as you see each one directly in the blockchain. Whereas in other Exchanges, you cannot confirm the transaction in the blockchain and also you are not the owner of purchased crypto-assets until you withdraw it to your personal wallet.
Although every regulated wallets are obliged to carry out the KYC procedure, RAISON has an advantage — a fully compliant with regulations due diligence process is done within just 6 minutes. And also, if you lose your password, you are able to go through the re-identification procedure and have no worries about your funds.
