Everything You Need to Know About Cryptocurrency Wallets
If you’re looking for information on cryptocurrency wallets, then you’ve come to the right place. The chances are that if you’ve ended up here, you’re already investing in cryptocurrencies, or you’re considering it. If you fall into either one of those buckets, then it’s great that you’re investigating crypto wallets because as you’ll see below, these wallets can play an integral role in safeguarding your digital currency investments.
In this detailed guide on cryptocurrency wallets, we’ll provide you with loads of information. We’ll start off first by getting you up to speed on the basics about what these wallets are. After that, we’ll move into sections about the different types of digital currency wallets and popular options on the market, and much more. We’ve included links below to all of the parts in this guide. If you’re searching for specific information, you can use these links to get right to what you’re in search of. Otherwise, you can read the full page to soak up everything.
What Are Cryptocurrency Wallets?
Cryptocurrency wallets are typically software programs that play two vital roles for folks that use them. First, they offer secure storage for private crypto keys. Along with that, they also allow users the ability to send and receive digital currency funds. We’ll discuss below why both of these are important.
If you’re new to cryptocurrencies, private keys are what allow you to have access to your funds. Without these keys, you can’t transfer or sell your assets. Also, if your private keys are ever stolen or hacked, then it’s a possibility that all of your cryptocurrency investments could be stolen. Due to the importance of your private keys, it’s essential that you utilize a cryptocurrency wallet to keep your investments safe.
The other benefit to cryptocurrency wallets is that they allow you to buy or sell more cryptocurrencies easily. Since everything is digitally based in the cryptocurrency realm, you’ll need to use a wallet or an exchange to move funds around. The beauty of using a cryptocurrency wallet is that this feature is built in along with the safe storage of your private keys.
As you’ll see in the next section, there are many different types of cryptocurrency wallets that you can choose from. You can use everything from a simple piece of paper to a sophisticated and specialized USB flash drive.
Types of Cryptocurrency Wallets
If you’re on the prowl for a cryptocurrency wallet to use, you’ll have a few different types of wallets that you can select from. In this section, we’ll give you an overview of the primary forms of crypto wallets that exist currently. As you browse this list, you can see which of these might make the most sense for you and your needs. Keep in mind that you may want to use more than one of these wallet forms. We’ll discuss that more in the section below about how to keep your funds secure.
Paper
Up first, we’ll cover the most simplistic of all cryptocurrency wallets, the paper wallet. A paper wallet consists of nothing other than, well, paper! If you decide to use a paper wallet, you’ll write your private keys down on a piece of paper and store it in a secure location.
Using a paper wallet is nice because it keeps your keys off anything connected to the internet. That makes it impossible for your keys to be stolen by hackers. Many people also like them thanks to the simplicity of just using a pen and paper to record things.
However, paper wallets have a drawback in that they can be misplaced. If you do an excellent job of storing them in a secure location and then forget where you put them, you’ll lose your private cryptocurrency keys. To help battle this, we’d urge you to make multiple copies of your private keys and store them in different secure locations. That way, if you forget about one, you’ll still have the chance of finding it in one of the other spots. Ideal places to store your paper wallets include safety deposit boxes, home safes, or other secure areas that no one else has access to.
Hardware
Another option for cryptocurrency wallets is a hardware format. Typically, these look much like a USB flash drive. They’re referred to as hardware form since there is an actual piece of hardware involved. These specialized units are made with high security built in so that your private crypto keys are kept safe.
Much like a paper wallet, the big selling point of hardware wallets is that they store your private keys offline. Because of this, you have increased security for your cryptocurrency funds. Hardware-based wallets are an excellent option if you’re leery about storing your keys online or on an internet-connected device.
Desktop
Up next, we’ve got desktop-based wallets for cryptocurrencies. As you might have guessed, these wallets reside on your computer desktop. To use one of these forms of crypto wallets, you’ll download the software onto your computer.
This type of cryptocurrency wallet is relatively secure. The main reason for this is that the wallet can only be used on the computer which it was downloaded to. However, if your computer gets a virus or is hacked, there is a possibility that someone else could gain access to your private keys. In that scenario, there is a possibility that you could lose some or all of your cryptocurrency funds.
Online
Another format of cryptocurrency wallet is an online one. As the name suggests, these crypto wallets operate online via websites. What’s nice about these types of wallets is that you can connect to them from any device with an internet connection. This makes it simple to gain access to things when you need them.
However, online wallets for cryptocurrencies have some risk associated with them. Since they are stored online and controlled by another company, it can make your private keys more vulnerable to attacks or closure. For example, if the online wallet service that you are using suddenly closes shop, you could lose access to your crypto funds forever if you don’t have them backed up elsewhere.
Mobile
Lastly, the other type of cryptocurrency wallet that you can utilize is a mobile format. Much like the desktop format, your crypto wallet is stored on a device. Instead of a desktop, mobile ones go on your mobile phone. The nice thing about this is that you almost always have your phone on you, which makes it easy to access your funds and keys while you’re on the go.
It’s important to note that mobile wallets still are not 100% secure. If your phone is hacked or stolen, then folks can potentially gain access to your cryptocurrencies and clean them out. Because of this, we’d suggest that you use some form of lock on your phone to help limit the likelihood of this happening.
One other thing worth noting is that the apps that run these mobile cryptocurrency wallets are much smaller than their desktop counterparts. Because of this, you won’t be able to store as much information on the mobile formats as you would on a desktop. However, unless you’ve got a ton of different cryptocurrencies that you’re holding, this should not be an issue.
Popular Cryptocurrency Wallets
If you’re looking for some potential wallets to consider using for your cryptocurrency funds, then this is the section for you. Here, we’ll highlight some of the most popular and trusted crypto wallets out there. While this list isn’t comprehensive of all wallets, it at least provides you with a launching pad of some that you can investigate as potentials.
Ledger Nano S (Hardware Wallet)
For those of you in the market for a hardware wallet for safekeeping of your crypto funds, look no further than the Ledger Nano. By far, Ledger Nano is the most popular hardware wallet on the market. This cryptocurrency wallet supports multiple digital currencies and uses a secure multi-signature security format.
Armory (Desktop Wallet)
One of the top desktop wallets out there is Armory. This wallet is popular with folks looking for desktop access but also wanting a ton of added security features. What attracts people to Armory is that they have some stellar secure touches that make them stand out from other desktop wallets. Notable features include multi-signature transactions, cold storage, and one-time printable backups.
Jaxx (Online and Mobile Wallet)
One of the best online wallets currently is Jaxx. It’s extremely popular due to their support of multiple currencies, including popular ones like Litecoin and Bitcoin. On top of being able to access their wallet online, you can also use their services on your mobile phone. If you’re holding multiple cryptocurrencies in your portfolio, this may be a great wallet for you to consider.
Mycelium (Mobile Wallet)
In the mobile wallet realm, Mycelium is one of the top dogs. Using their app, you can access your private crypto data using either Android or Apple phones. This mobile wallet is packed with security features to help protect your private keys and funds. The only main drawback to Mycelium is that they only support Bitcoin at this time. Hopefully, we’ll see them add support for additional digital currencies at a later date.
How to Keep Your Cryptocurrency Wallet Secure
While using a cryptocurrency wallet is a great thing to do, it’s not the end of the line if you’d like to really make sure that you’ve got your crypto keys and funds as secure as possible. In this section, we’ve included our top three tips for how you can keep your cryptocurrencies wallet safe. We’d urge you to implement as many of these as possible to help limit the likelihood of running into issues with private key security.
Update the Software Regularly
If you’re using a wallet that has occasional updates, you’ll want to make sure that you’re updating things as often as possible. In the case of wallets, updates are usually helping to increase the security of things. We’d suggest checking for updates at least once a month to make sure that you’ve always got the latest software edition.
Back Up Your Wallet
No matter which form of wallet you settle on, you should also be sure to create a backup of your wallet. For example, if you’re using a desktop wallet, then you should also consider using a paper wallet or a hardware wallet as a backup. As great as computers are, they can still crash, and that can take your private keys (and your digital funds) with it if you don’t have a proper backup in place.
Add Extra Layers of Security
Having a wallet is just one step of keeping your cryptocurrency funds safe. Below, we’ve included a handful of additional security layers that you can add to help give you even more protection. Consider adding some or all of these options in addition to your wallet.
Use two-factor authentication
Make your passwords complex and lengthy
Only use wallets with stellar reputations
Use multi-signature options that require the permission of a second individual for transactions
Additional Resources
If you’re seeking more information about cryptocurrencies outside of wallets, then you don’t want to miss this section. Here, we’ll bring you many other helpful cryptocurrency resources that you can use to increase your knowledge. If you’re not ready to dig into all of these just yet, consider bookmarking this page so that you can come back to it later.
Cryptocurrency Beginner’s Guide
We’ve developed an excellent cryptocurrency beginner’s guide to help crypto newbies learn the ropes. If you don’t have much or any experience with digital currencies, this is the place for you to build your knowledge base. Using the link below, you can learn what cryptocurrencies are, how they function, where you can buy them, and much more.
Cryptocurrency FAQ Page
Due to the complexity of cryptocurrencies, the chances are that you probably have some unanswered questions. If that’s the case, then be sure to check out the link below to our cryptocurrency FAQ page. On this page, we’ve built out an extended list of questions that we commonly get about digital currencies.
How to Mine Cryptocurrency Guide
We’ve also crafted an excellent guide on how to mine cryptocurrencies. If you’re interested in learning how you can go about getting in on crypto mining action, then be sure to check out our detailed guide. Just click below to view this valuable resource.
Conclusion
Hopefully, you’ve gained a greater understanding of cryptocurrency wallets and how they function. We hope that you’ve located all of the information that you were searching for. If you’re still seeking more cryptocurrency resources and you skimmed over the additional resources section above, then be sure to circle back to that part. We thank you for stopping by to read this guide, and we wish you the best of luck in your future cryptocurrency investing adventures!
Cryptocurrency Wallets Frequently Asked Questions
If you find yourself with some unanswered questions at this time, we hope that this section will help you find the answers that you need. Below, we’ve gathered up some questions that we commonly receive relating to cryptocurrency wallets. To view the answers below, simply click on the questions themselves.
Do I have to use a cryptocurrency wallet?
You don’t have to use a cryptocurrency wallet. However, we’d highly advise that you do, considering the security they provide. As we discussed earlier, if you lose the private keys to your digital currencies or if the keys are hacked, you’ve lost your crypto funds forever. With real money on the line, we prefer to play it safe. Ultimately, it’s up to you to decide if you want to use a crypto wallet or not.
Which crypto wallet is right for me?
Unfortunately, we can’t provide a one-size-fits-all answer to this question. The right cryptocurrency wallet for you may not be the right one for someone else. You’ll first need to determine your preferences regarding software or hardware wallets. Once you have that sorted out, you’ll then want to locate a trusted wallet that provides you with all of the features that you need.
Do I need to use more than one cryptocurrency wallet?
It’s not a requirement that you use more than one crypto wallet. However, we think that it’s a good idea if you don’t mind a little extra setup work. Using more than one wallet is a stellar idea if you’re using a desktop or mobile-based wallet. Just in case your phone or computer crashes, you’ll have a backup of your private keys information elsewhere so that you don’t lose access to your crypto funds.
Are cryptocurrency wallets secure?
Every type of cryptocurrency wallet provides some layer of security. However, the amount of security offered varies depending on the kind of wallet being used. In general, hardware wallets are more secure than online or desktop ones since they are not stored on devices connected to the internet. The same can be said for paper wallets. To read more about the advantages and drawbacks of different types of crypto wallets, check out our section above dedicated to the kinds of available wallets.
Are there transaction fees associated with cryptocurrency wallets?
As a general rule of thumb, you’ll pay some form of transaction fee whenever you move cryptocurrency funds around. However, the good news is that these transaction fees are relatively cheap in comparison to traditional bank fees.
The amount that you pay will vary depending on the wallet you’re using. In some cases, you can pay a higher or lower fee depending on how fast you need a confirmation for the transaction. In some cases, you might even be able to have some zero-fee transactions along the way.
Are cryptocurrency wallets anonymous?
In short, cryptocurrency wallets are not anonymous. While information like your name and address is not stored on a wallet, things can still be tied back to you. This is similar to simply owning cryptocurrencies in general. While the blockchain may not know exactly who you are, it does often know IP addresses and other items that could be used to identify the owner.
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