Marcus Richards
They say, ‘The best time to invest was 20 years ago.’
What they essentially mean by this old saying is if you want to get high returns in the future, you should act now.
People who believe in diversifying their investment portfolio could consider investing in Cryptocurrency. The global market capitalization of Cryptocurrency was $2.21 trillion at the end of 2021, and it is expected to grow even more this year.
So, you can see how lucrative it is as an investment opportunity.
But, if you plan to invest in Cryptocurrency, the first thing you should know about it is how to find the right Crypto wallet and how these digital wallets work.
We know that understanding digital wallets in cryptocurrency is tough, which is why we have decided to shed some light on this subject today.
Let’s begin.
What Is A Crypto Wallet?
You cannot invest in Cryptocurrencies without owning a digital Crypto wallet first.
It works like the way your actual wallet works. Just like you store your money in a wallet, a Crypto wallet is a place to store your Cryptocurrencies.
If you want to be involved in a Crypto transaction, it works the same way as any other electronic transaction. There is no physical change except for the change in your credit balance.
So, when you buy or sell Crypto coins, the credit balance on your wallet goes up and down accordingly. You cannot possibly find stability in the Cryptocurrency investing ecosystem if you don’t have an authentic wallet to store your coins into.
How Does It Work?
Crypto wallets come in either hardware or software form. Even though each of them functions differently, they ensure security while you use them to get your hands on your Cryptocurrencies.
A Crypto wallet does not hold the actual Cryptocurrency. It is stored on the public ledger operated by Blockchain technology.
It simply holds the information of the private and public keys to carry out the transactions.
A public key is a long string of random numbers, and it works the same way your bank account number does. This key allows you to receive Cryptocurrency in transactions with a wallet address.
On the other hand, the private key is meant for you to access the actual Cryptocurrency stored on the Blockchain. So, you should never share this information with any outsider because if they have your private key, they can lay their hands on your coins.
Types of Crypto Wallets
(i). Hardware Wallets: Hardware Wallets are known as cold wallets. These are physical devices that look the same as a USB stick. It is responsible for storing the private key that can help you access Cryptocurrencies on the Blockchain. Since it isn’t connected to the internet and exists in its physical form, people consider it the safest way to store Cryptocurrency.
Some of the best cold wallets are:
- Ledger Nano X.
- Trezor Model T.
- Ledger Nano S.
- ELLIPAL Titan.
- CoolWallet Pro.
(ii). Non-Custodial Wallets: Non-custodial wallets allow you to have complete control over your digital currencies without any third-party involvement. They offer more features and freedom than hosted wallets. You can access your information with a private key that should be in your control, and these wallets help you store that safely.
Some of the best non-custodial wallets are:
- MetaMask.
- Coinbase Wallet.
- Trust Wallet.
- MyEtherWallet.
- Coinomi.
- Exodus.
(iii). Hosted Wallets: Hosted wallets are easy to set up, which explains why they are so popular. These wallets are hosted on the exchange platform from where you buy your Cryptos. This wallet also holds your private key, but the features and functionalities it offers are limited. For example, you cannot use your Crypto to buy NFT if it’s stored in a hosted wallet.
Some of the best hosted Crypto wallets are:
- Coinbase.
- Kraken.
- Ledger Nano X.
- Trezor Model T.
- Mycelium.
- Exodus.
How To Set Up A Crypto Wallet?
If there are certain things to know before investing in Cryptocurrency, it is how to set up a Crypto wallet.
There is a two-step verification process that you must undergo while setting up the Crypto wallet.
The non-custodial wallets require you to use some kind of an app. But, you don’t have to put any personal information like your email to set it up. All you have to do is store your private key in a safe place. If you lose this key, you won’t be able to access your Cryptos any longer.
However, if you still need to access your Cryptos safely, a hardware wallet can be a good option. All you have to do is buy it from a verified seller and avoid the second-hand wallet altogether.
We understand that it can be pricey. Once you purchase the device, you need to download the software from the company’s official website, and bam! Your Crypto wallet is set.
How To Choose The Best Crypto Wallet?
- The first parameter in choosing a Crypto wallet is security. Each Crypto app has different security aspects, so you should check each one of those before you put your money into them. Security is one term you’ll come across often as you begin Crypto trading, so trade carefully.
- The transaction fees also vary from one wallet to another. You can automatically set them on some wallets to accelerate the transaction process, while some wallets allow you to customize the fee as a cost-cutting measure.
- Some digital wallets store a wide range of Cryptocurrencies, while some store a limited amount of them. You must think about how often you swap between currencies to find out which wallet will support your needs the best.
- Last but not least, customer support has to be 24/7. Always review the kind of support you receive from the wallet before you invest in it because it might trouble you in the long run.
Signing Off
Are you still with us?
It means you have got a comprehensive knowledge of how Crypto wallets work and how you can choose the best one for your Cryptocurrencies.
With so many options available in the market, it’s easy to get confused about which digital wallet will work the best for your needs. So, if you need more information on them, let us know in the comment box below.
