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Cryptocurrency wallets refer to digital wallets used for storing digital keys required to transfer or receive digital assets, including Ethereum (ETH), Bitcoin (BTC), and Dogecoin (DOGE).
You should know that cryptocurrency wallets are designed not for actual cryptocurrency storage, though the name may somehow indicate that. They are like ledgers as they are in charge of the holder’s identity– they give the owner entry to the blockchain system and the history of every trade.
One vital thing you shouldn’t forget is that cryptocurrency wallets are expected to locate the digital currency linked to your wallet address in the blockchain.
Crypto wallets: the available types
There are three main crypto wallet types:
These three types are classified under two major wallet categories, including:
These are not virtual, meaning that they take the physical form. An example can be paper or a hard drive. So, we have the hardware and paper wallets categorized under cold wallets. As wallets that need no internet connection, they are considered the most secure.
However, you can lose your funds in cold wallets if the wallet is lost with you having no backup. Also, their high level of security can be a challenge because owners of the storage devices can’t use their funds for commerce or trading when not with their computers.
These storage devices feature an internet connection, making their security system prone to breaches. Although their ultimate security may not be guaranteed, hot wallets are flexible due to how fund owners can access or use their financial investments. The software wallets fall under the hot wallets, appearing as web wallets, mobile app wallets, or desktop wallets.
Note: Most top cryptocurrency wallets now are a combination of cold and hot wallets (hybrid wallets). This is because they give mobile and desktop access. The benefit of this system is allowing it to connect to a hardware wallet, which is characterized by ultimate backup protection.
Now, let’s discuss how crypto wallets work.
Crypto wallets offer both private and public keys to give users the opportunity to interact with their assets, which are kept in public blockchain networks.
The public key of a wallet
This is a wallet address for receiving funds. It could specifically be described as the user’s bank account number.
The private key of a wallet
This is a key utilized for accessing funds when it comes to transactions. It could specifically be described as a user’s bank account PIN or password for logging in and making payments.
You know how crypto wallets work, so let’s discuss things you need to check when searching for a suitable crypto wallet.
Before talking about what you need to look for in a crypto wallet, below are questions you must provide clear answers to:
Q1. How often do I trade?
This question has to do with what your intention is towards trading – will it be occasional trading or daily trading? If you are an active trader, hot digital storage devices will be recommended. This is because it is practical and fast. But this doesn’t mean that you can’t go for a cold wallet, particularly when you decide to use a savings account.
Q2. What do I want to trade?
This question has to do with the particular crypto you want to buy. Is it Bitcoin, Stablecoins, or Altcoins? Any chosen crypto wallet must support the coin you will be trading and perfectly fit for any other currencies you may trade later.
Q3. How much can I spend?
This question has to do with the amount of crypto you may think of getting later. For this, the hardware types will be the ideal option; however, you will need to pay upfront to get the wallet– this is different from hot wallets that are usually free. Besides, there are hot wallets with higher cryptocurrency trading fees, but owners will enjoy exceptional functionality and more rapid transactions.
Q4. How functional must my wallet be?
This question involves the specific thing you may need to do with your assets aside from trading them. If you aim to engage your crypto in a money-making activity, a wallet supporting staking, lending, and deposits is a better option.
After giving these questions appropriate answers, then check if your preferred crypto wallet has the following properties:
It is advisable to pick a crypto wallet that supports several coins if you are not only trading Bitcoin.
It’s crucial that you choose a wallet with an accessible interface. It should be welcome and straightforward to both newbies and professionals in the world of crypto.
24/7 customer support
Excellent and responsive customer support is a great bonus. This may be a saver when there are visual glitches or bugs due to the frequent updates on the app.
Hardware wallet compatibility
The hardware type of wallet is an excellent option if you’re interested in cryptocurrency, even those who don’t engage in frequent trading to protect their assets. You will have a better advantage if you have a hot wallet that matches one or more hardware wallet brands.
The best crypto wallet: how we choose
The following are the considerable factors used in choosing the best crypto:
Every wallet has functionality. Features deal with this. The wallets are characterized by live charts, a good number of tradable assets, hardware wallet compatibility, and lending & staking capabilities.
These crypto wallets come with a strong security system. They feature open-source code, multi-signature support, biometrics, 2-factor authentication, and strong security protocols when transactions are involved.
The wallet type you select will determine the cost involved. The wallets selected have reasonable prices, less charge for transaction processing, and customizable transaction fees.
The top 5 crypto wallets in 2022
Below are the best crypto wallets you may want to consider in 2022:
This wallet is best for security. As an easy-to-use wallet, Guarda offers users a simple way of purchasing, storing, swapping, and earning through staking many crypto assets. Those who prefer to use this wallet access it through a web interface, a smartphone, a Chrome browser extension, or a desktop client. Some benefits attached to using Guarda wallet are how it supports more than 400 assets, responsive customer service, face ID authentication for mobile and multiple-signature digital storage devices. However, its in-app crypto purchase fees are on the high side.
This wallet is perfectly made for starters. It is the best multi-asset cryptocurrency wallet that offers a friendly experience to users by allowing them to access their portfolio on a single interface. Besides, this wallet gives users the opportunity to purchase, sell, and earn interest through staking on their crypto assets. Exodus wallet is on mobile and desktop, has a built-in exchange, and supports numerous assets. However, its software is not open-source.
This is great for Bitcoin. It’s characteristically open-source and secure. Besides, it’s a wallet that supports Lightning Network payments when sending and receiving Bitcoin. However, it features no customer support, it’s not beginner-friendly, and it is only designed for Bitcoin.
This wallet is great for mobile. It allows coin owners to manage Ethereum, Bitcoin, and ERC-20 tokens securely. Mycelium offers many advanced features, including single address savings accounts, spending accounts, and cold storage integration. It significantly features open-source software, strong privacy, and an in-app digital currency purchase option. However, it is not beginner-friendly and only for mobile.
This wallet is great for low costs. The only fee it charges is for the network. With it, users can store numerous crypto and NFTs securely and offer seamless access to dApps. However, Coinbase wallet software is not open-source.
Some crucial factors to consider when choosing a crypto wallet in 2022 are transparency, optimal security, allowing seamless trade of crypto, and numerous digital currency asset management features.
With the best crypto storage device discussed in this video, crypto users can enjoy a better experience, excellent features, even robust protection.