The Ultimate Guide To Crypto Wallets
In the beginning, one of the problems prospective investors had with crypto was that they felt it was unsafe. In a traditional banking system, an investor’s money is kept behind a vault door, protected by a highly intricate security system.
Even the image of a modern bank represents a symbol of security. On the internet, however, that image is a little different. The issue of cyber attacks and hacking is often widely publicised, leading a number of investors to be wary of cryptocurrency’s blockchain vulnerabilities.
The invention of Trezor in 2014, however, changed this image. Standing for the word “vault”, Trezor was a crowdfunded project changing the way people trade Bitcoin and protect their investments. Instead of the paper-esque Bitcoin-Qt, users were provided with a secure, user-friendly hard wallet which became the pioneer of security software used today.
In 2022, security and stability are rarely a determining factor in a prospective investor’s decision to trade cryptocurrency (at least, not in terms of hackers). Wallets have become a necessary part of the cryptocurrency landscape, giving investors peace of mind and an ability to decisively control and safeguard their assets.
But How Exactly Does A Crypto Wallet Work?
To understand how a crypto wallet works, it is first important to get to grips with the system it operates inside. Blockchain is a public ledger that stores every piece of crypto data in blocks. Not only does it record transactions, but also the balances, addresses and keys. An investor’s crypto portfolio, then, is not exactly stored in a wallet but rather software which allows the investor to interact with balances in the blockchain and move their coins wherever they want.
While some of this software can typically allow a user to send, receive and store crypto, there are some wallets which have more advanced software, offering additional features such as swapping out tokens, staking coins and accessing dApps. All of them are encrypted with private keys associated with an account on the blockchain, making them safe and secure, just as any other banking vault would be.
How Do You Set Up A Crypto Wallet?
Setting up a crypto wallet is simple, but an investor must first decide what type of wallet they want. There are two main wallet types that must be examined. For starters, there are hardware wallets costing around $100. These are physical USB port devices which store crypto offline and can interact with an investor’s computer through a web-based interface, a company-created app or a separate software wallet. Secondly, there are software wallets. These are typically unique to each cryptocurrency, and they can be installed in three alternate ways:
- Web-Based Wallets
Installed using a browser extension, making it easy to interact with dApps and DeFi protocols.
- Desktop Wallets
Installed on a desktop or laptop computer.
- Mobile Wallets
Installed over a mobile phone, allowing users to store, transact and control private keys through a QR code.
Once an investor has recognised which is a good suit for them and their assets, they can move on to setting it up and utilising what it can do. In terms of hardware, the process of using a crypto wallet is done by purchasing the wallet and installing the software through a USB port.
For software, the investor must download the app, create an account and set up a private key. This is ordinarily presented as a random twelve-word phrase, which must be kept in a secure location. If it is lost or forgotten, you will not be able to access your crypto. As mentioned previously, with different wallets offering alternative services, understanding how to use them has to come through studying the specific wallet itself, as well as investor experiences.
What Are The Best Bitcoin Wallets?
For any investors who trade Bitcoin, looking for a solid, secure wallet to store their assets, there are many to choose from. Once again, intensive research has to be done in order to realise which one is the right fit, but here are five of the most popular to give an idea of the market:
For any beginners, it is hard to beat Exodus. This is a free service which offers cloud and cold storage, with good customer support that can guide a new investor through the process.
Just as it was back in 2014, Trezor remains one of the most secure and strongest wallets available. The only issues come with the higher price point, as it currently holds a $195 purchase cost.
Perhaps one of the best cold storage hardware wallets, this is a good option for those who want to keep software offline and attain the benefit of customer and community support.
Another free app, Mycelium is a wallet for mobile users which offers a large amount of control over transaction fees, while also being able to integrate with a hardware wallet.
Voted one of the best crypto wallets of 2022, this is a free cold storage wallet which is arguably the most fitting for Android users.
What Are The Best Ethereum Wallets?
On the other side of the coin, for investors who trade Ethereum, there are a number of other wallets which utilise the dApps available on the network and offer tight security for assets in the process. Once again, here are five examples of the most popular:
This is a name which will crop up a lot for Ethereum investors. It is the most widely utilised wallet and is available both as a browser extension and as a mobile app.
Guarda is a non-custodial wallet that offers a strong degree of security and is available for desktop, mobiles and web interfaces.
Taking advantage of Ethereum’s many dApp projects, this is a wallet which also has a dApp browser, meaning it gives you free reign of Ethereum’s blossoming ecosystem.
Pipped as the solution to ETH and ERC20 tokens, this wallet allows users to store, exchange and trade Ethereum using a bank card. It also supports around 300 other cryptocurrencies, making it especially versatile.
Being a multi-asset mobile wallet, Jaxx supports thirteen cryptocurrencies and has definitive security features which ensure that private keys never leave the device.