Cryptocurrencies have taken the world by storm, and many people are looking for ways to get involved. One of the most important aspects of using cryptocurrencies is securing your investment. One of the best attributes of cryptocurrency is the ability to self custody your assets by holding the private keys to your coins. This means that you are the only one who has access to your funds, and no one else can take them away from you.
This is done through the use of wallets. In this guide, we will discuss what cryptocurrency wallets are, how they work, and the different types that are available. We will also provide recommendations on which wallets you should use depending on what type of user you are. Let’s get started!
When it comes to securing your crypto, there are a lot of options out there. And, just like with any other investment, you want to make sure you’re diversified. That’s why it’s important to have different types of cryptocurrency wallets. Here are four that you should consider using:
Hot/ Mobile Wallet
A hot wallet is one that is connected to the internet. This type of wallet is convenient because it allows you to quickly and easily send and receive funds. However, it’s also more vulnerable to hacking than other types of wallets.
Cold/Hardware Wallet
A cold wallet is one that is not connected to the internet. This makes it much harder for hackers to access your funds. However, it can also be more difficult to use because you can’t just send and receive funds instantly.
Desktop Wallet
Wallets that can be installed on different desktops and work with Windows, Mac or Linux. Your keys are stored in the wallet offline so you never need to worry about losing them when there is no internet connection! Desktop wallets often come equipped with features more advanced than mobile ones which may increase privacy but also require more technical knowledge required for signing transactions- perfect if this interests you as well
Paper Wallet
A paper wallet is simply a piece of paper with your public and private keys printed on it. This is the most secure way to store your crypto because it means that hackers would need to physically steal the paper in order to get your keys.
Now that you know about the different types of cryptocurrency wallets, it’s time discuss which one you should use. The answer to this question depends on a few factors. First, you need to consider what type of user you are. Are you a casual investor or a more serious one? If you’re just getting started with investing in crypto, then a hot wallet is probably the best option for you. However, if you’re more serious about it and you want to take steps to secure your investment, then a cold wallet is the way to go.
Another factor to consider is how much money you’re investing. If you’re only investing a small amount of money, then a hot wallet is probably fine. However, if you’re investing a larger amount of money, then you’ll want to make sure it’s stored in a cold wallet for security purposes.
Finally, you need to consider what type of assets you’re holding. If you’re only holding Bitcoin, then most types of wallet will work. However, if you’re holding other types of assets, such as altcoins, then you’ll need to make sure you’re using a compatible wallet. For example, if you’re holding Ethereum, then you’ll need to use an Ethereum-compatible wallet.
Hot Wallet Options
- Coinbase is the perfect way for beginners to get started with cryptocurrency investing. It’s simple, easy-to use and supports thousands of different cryptocurrencies!
- Electrum is designed to work specifically with Bitcoin, so it’s a terrific option if your only crypto investment is bitcoin.
- Metamask is a popular hot cryptocurrency wallet that gives investors easier access to the Ethereum blockchain and Web3.
Cold Wallet Options
- The Trezor Model T is one of the best, most secure cold cryptocurrency wallet options for investors who prioritise security in their cold storage and are willing to pay for it.
- The Ledger Nano X is another great albeit lower cost cold wallet option for security-minded crypto faithful
Hardware wallets are amazing and all, but don’t get too confident. The people using them are just as important! Be sure to always follow useful security tips from Trezor or Ledger’s websites before making your purchase so that you know what they recommend when it comes time for installation on an unfamiliar device – plus if possible avoid buying used hardware wallet altogether because who knows if there is malware present (though Trezor and Ledger have security measures to counter this).
There you have it! A complete guide to cryptocurrency wallets. Now that you know about the different types of wallets and how to choose the right one for you, you have fulfilled one of the most important facets of crypto currency – SELF CUSTODY.
