Cryptocurrency Wallets – What are your options in 2021?
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While principally they may function the same way, wallets in the crypto space work a bit differently than conventional wallets. Cryptocurrencies don’t have a physical form, rather they exist digitally on their respective blockchains. Therefore, when we talk about crypto wallets, it is more accurate to store the actual access keys that you have when transacting or trading crypto.
In this article, we’ll be discussing cryptocurrency wallets and what options are available when it comes to storing your digital crypto assets.
Don’t have a wallet yet? Click here to purchase a crypto wallet from our online products page.
What are cryptocurrency wallets?
Now, before we dive in, let’s briefly go over what cryptocurrency wallets are.
A wallet in the world of cryptocurrency is a secure way to manage and handle your digital crypto assets. It doesn’t really “hold” your crypto (like a physical wallet does), instead, it holds the keys that allow you to spend the coins or tokens that you own. Each cryptocurrency that you own has two parts, an “address” that is publicly known and a “private key” that only you can see.
The address is where you send your coins to. The private key is what allows you to make payments from that address. Anyone who has access to your private key has access to your coins.
This is true even if you have not disclosed your address, as the address can be figured out using the private key. So be very careful with your private key and never disclose it to any person, software, or website unless you completely trust them.
Hot or cold wallets?
Also important to note in regards to crypto wallets is that they come in two variants: a hot wallet and a cold wallet.
A hot wallet is one that is connected to the internet and takes the form of an application that runs on your computer or mobile devices. Hot wallets are generally considered to be the best option for those just starting out in crypto due to their user-friendly interface, accessibility, and features.
In contrast, a cold wallet is one that is offline, take in the form of a small physical device that allows you to take control of your private keys and verify transactions before they are processed. Cold wallets are considered to be more secure and because of this they are better suited for large amounts of coins or long-term holding.
Hardware wallets are physical devices that connect to your computer via USB. As we mentioned above, these wallets are also known as cold wallets. When they’re connected to your computer you can transfer funds off them, but when they’ve disconnected your funds are completely secure.
But what about if you lose your hardware wallet? A good hardware wallet has something called a “seed” that allows you to reinstall your wallet onto any new device.
Remember, the wallet doesn’t hold your cryptocurrency, it just holds the keys to the addresses where your currency is. A seed is typically a 24-word phrase, from which it is possible to regenerate all the addresses (and corresponding private keys) that were on your original hardware wallet.
If you want to know more about how this crazy black magic works, read up on heuristically determined addresses (and yes, it is as complicated as it sounds!). And of course, to be able to reinstall a wallet from its seed you will need to be able to keep that 24-word phrase somewhere secure!
Hardware wallets are an excellent choice for crypto traders who want full control over their crypto assets and value the security features that they offer.
Below are excellent examples of crypto hardware wallets:
Both are highly secure wallets with robust security features designed to safe-keep your digital crypto assets and give you full control over your public and private keys.
Shop hardware wallets: Click here to view our complete collection of crypto hardware wallets.
Software wallets fall under the category of hot wallets where they are connected to the internet and are available as programs or applications that on your mobile devices or computers.
Some of these wallets offer cross-platform compatibility to allow users to manage their crypto assets wherever they are. This makes them an excellent choice for beginners, or those who prioritize accessibility of their digital funds.
Mobile wallets are hot wallets that take the form of a downloadable app on your mobile devices. Some mobile wallets such as Exodus also have a desktop companion app that will synchronize your portfolio and help you manage your assets on multiple platforms.
Mobile wallets are often considered to be the best choice for people who are new to the world of cryptocurrency. They’re packed with features that make it easy to manage your assets and come with user-friendly interfaces.
Most mobile wallets will store your private key for you. While that can be convenient (as you don’t need to worry about losing it or accidentally exposing it), it means that the wallet (and not you) is in control of your private keys.
Below are some of the most notable mobile crypto wallets:
As mentioned above, desktop wallets often come as a companion to their mobile counterparts. These wallets allow you to easily exchange, manage and track your crypto assets.
And just like mobile wallets, desktop wallets require internet connectivity to function and therefore are classified as hot wallets.
Below are some desktop wallets to consider:
Cryptocurrency doesn’t have to be purely digital either, once you have your address and private key you can go old school and print it out – what is known as a “paper wallet”.
Paper wallets can be generated online complete with QR codes which make it easy to import to a mobile wallet, you just need to scan the QR code with your app. This is another form of cold storage, as it’s definitely not connected to the internet (and just don’t show it on TV!).
If you print a copy of the details inside your Easy Crypto Wallet (make sure you include the private keys), you will have a “paper wallet” that you can store somewhere secure like in a safe.
But why stop at just one?
Remember, your cryptocurrency wallets don’t actually hold your crypto, they just hold the addresses and private keys that allow you to move or spend your cryptocurrency. So, there’s no need to have just one wallet, you can keep those addresses and private keys in multiple different wallets.
As long as you stick with fully secure wallets, the safest option is to keep each address in more than one type of wallet. This will mean you’re protected against worst-case scenarios such as a hard-drive failure, a house fire, or accidentally throwing them out!
*Note: Some addresses become invalid after a transaction has been sent from them. Make sure that you know that your address is valid before you send cryptocurrencies to an existing address that you hold.
Further reading: Click here for our complete beginners guide into crypto wallets.
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Last updated April 3rd, 2021.