If you’re thinking about buying any type of cryptocurrency, you need to know how to store it and access it. Just like with normal paper money, you will keep and access your money in what is known as a wallet. Of course, crypto wallets are much different than traditional wallets, and it is critical that you understand how they work in order to avoid putting your investments at risk.
A crypto wallet is essentially a place that can store your private keys safely. There are hundreds of wallet options out there to choose from, and for most people, it will be necessary to have more than one. Some wallets will only work for Bitcoin, others will work for any Ethereum based coin, and others are made for specific coins or tokens. The following are the most important things you need to know about crypto wallets before making any decisions:
- Desktop Wallets – A desktop wallet is kept on your computer desktop. You will download the software to your PC, where you can store your keys. From here, you can send or receive the currency of your choice. A good desktop wallet will also let you encrypt the data for further safety.
- Mobile Wallets – These are very similar to desktop wallets, except they are kept on your mobile device. In most cases, these will be apps developed by either the organization behind a specific coin, or a trusted third party.
- Custodial Wallets – There are several third party services that will store your keys for you, and provide you access through the web. These are by far the most convenient option, but they are also the least secure and usually the least private.
- Paper Wallets – A paper wallet is what it is called when you print off your private keys. As long as you are the only one with access to that paper, your crypto will be safe. If the paper is lost, stolen, or destroyed, however, you’ll lose access to those coins.
- Hardware Wallets – Another popular option is using a hardware wallet, which is a piece of hardware, usually like a USB Thumb Drive, which allows you to store the key information on it. High quality hardware wallets will also be encrypted for further protection.
When choosing a wallet, keep in mind that anytime anyone has access to your private keys, they also have the ability to take all your coins or tokens. If you aren’t planning on using or trading your crypto often, it is best to keep them offline using either a paper wallet or a hardware wallet. If you need more immediate access, a good desktop or mobile wallet is likely the safest and most convenient option.