Cryptocurrency Wallets – How to Choose, Manage and Secure Your Wallet

Cryptocurrency is the new kid on the block. It’s taking the financial world by storm. And everyone wants in — so they’ve created hundreds of new cryptocurrencies. Each cryptocurrency requires a wallet, which is a piece of software that stores your cryptocurrency in an encrypted form so you can access it later. This article will explain what you need to consider when choosing or creating a cryptocurrency wallet.

Introduction

The first thing you need when you start investing in cryptocurrencies is a digital wallet. A store of cryptocurrency keys and addresses, called a wallet, is the easiest way to manage your holdings.

When it comes to selecting a cryptocurrency wallet, there are many factors that you should consider. Choose wisely, and you can rest assured that your digital assets are safe and secure. Decide wrongly, though, and you might lose access to your money forever. To help make the process easier for you, here is an overview of what to look for when choosing a cryptocurrency wallet.

Look for a cryptocurrency wallet with a good reputation.

It’s important to consider where and how you plan on using your cryptocurrency wallet. If you’re looking for something that can be accessed from any location, then a desktop wallet may be the best option. If you’re only planning on using it when at home, a secure mobile app could be more suitable.

If you have access to only one device, such as a smartphone or tablet computer, then this will narrow down your choices further as each type of device has its own set of wallets available for it. For example: if you have an iPhone and want to use an iOS-based wallet (such as Bread Wallet), then there’s no need to look at other options since Apple makes this type of product exclusively for its own products (therefore making them incompatible with Android devices).

Consider the type of device you are using.

Here’s an overview of the different types of cryptocurrency wallets:

• Hardware (Offline) wallets are the most secure. They store your private keys on a piece of hardware, which you can then use to sign transactions. The hardware wallet is designed and built to be tamper-proof, so it’s much harder for someone to hack into it or steal your funds. The offline crypto wallet is stored on a physical device like a disk, memory stick or paper printout. Offline wallets are considered more secure as they cannot be hacked into from remote locations through the internet. However, they aren’t as convenient as online wallets because you need another device to send and receive cryptocurrencies through the network. Examples of hardware wallets of good repute include Trezor and Ledger Nano S (hardware), or Jaxx (software).
  
• Online wallets are easy to access from any device with internet access such as smartphones or computers. They allow users to store their holdings without downloading anything because all data is hosted in the cloud (hence why they’re also called cloud storage). However, this convenience comes at a cost: risk associated with using third-party services means your private keys are stored by someone else—and if something goes wrong with those services’ security measures, there’s no telling what might happen next! For example, Mt Gox was once one of the largest bitcoin exchanges in existence before hackers stole more than $450 million worth of bitcoins from its customers’ accounts back in 2014; Bitfinex has suffered hacks twice since 2016 resulting in losses exceeding nearly $20 million each time; Bithumb suffered multiple attacks during 2017 which resulted in millions lost due out hackers stealing around $30 million worth Bitcoin Cash.
  Some popular online wallets are MetaMask & Trust Wallet.
  
• Paper wallets are just what they sound like – a printed list of all the crypto assets that users want to hold onto digitally. To use them, you only need to import those funds into another wallet which you must do manually when needed, and only keep one copy off-site.

Do you prefer centralized or decentralized?

• Decentralized wallets are more difficult to use for beginners, but offer a higher level of security. These wallets store your cryptocurrency on the blockchain rather than in a centralized server. This means that you don’t need to trust any third party with your funds, which means that it’s much harder for hackers to gain access to them and steal them from you. However, because decentralized wallets rely on the security of the blockchain itself, they can be vulnerable if something goes wrong with their network or servers—so don’t leave too much money in them!

• Centralized wallets are easier to use and understand by beginners, but offer less protection against hacks. These wallets store your cryptocurrency on a central server controlled by one company or individual (such as Coinbase), rather than directly on the blockchain itself where everyone can see it and verify its existence independently of any single entity’s opinion about its validity (which is why it’s called “decentralized”).

Are you comfortable with cold or hot storage?

Cold storage refers to a wallet that is not connected to the Internet. This makes it more secure, as there is less risk of someone stealing your coins. However, this also means that you can’t access your funds easily if they are stored in cold storage. Hot storage refers to wallets that are connected to the internet and therefore much less secure than cold storage but easier to use.

Cold storage is most commonly used by people who want their cryptocurrency protected from hackers or other malicious actors online but don’t require quick access to their funds during trading or spending transactions. You will pay more for a wallet with this feature because it requires additional security measures like storing private keys offline or using multi-signature technology for increased protection against fraud attempts by hackers.

How do I secure my wallet?

• Is there a need for wallet backup?
  Yes, you should. There are many reasons why it’s necessary to backup your wallet. First and foremost, it’s because you never know when your computer may be stolen or lost. Secondly, if you lose your private key or forget your password, you will not be able to access your funds anymore. In order to avoid such scenarios from happening, we strongly recommend that you should always keep a copy of your wallet files somewhere safe on another device or in the cloud.

• How do I back up my wallet?
  To back up your wallet, you will need to download the software for the specific cryptocurrency you are using, enter the password and then click on “backup”. It’s very important that you write down the 12, 18, or 24 words long phrase that will be generated after you enter your password and click on “backup”. This phrase is known as a mnemonic seed or recovery phrase and can be used to recover your funds if anything goes wrong with your wallet.

• What if the computer with blockchain and wallet files gets stolen or lost, what do I do?
  If you have access to a second computer with a full copy of the blockchain, then you can recover your wallet using this method:

1. Download and install a new version of the wallet software on your second computer. It is important that this version is in sync with the mainnet (blockchain).

2. Open the new wallet software, select ‘Import wallet’ from the file menu and select ‘Private key’ as the type of import method.

3. Enter your private key into the box provided (make sure it’s correct!) and click ‘Next’

4. If all goes well, you will see your old balance displayed on the screen!

If you are using the desktop version of the wallet, then all you need to do is make sure that your computer is not infected with any viruses or malware. This should be done regularly anyway, as it will help prevent any data being stolen from your system.

Can you afford not to use a hardware wallet?

Hardware wallets are more secure than most other options, but they lack the convenience of software wallets. If you’re investing a lot in cryptocurrency and want to keep your funds safe from hackers, a hardware wallet is the best choice.

If you don’t plan on storing large amounts of cryptocurrency on your device or computer, then use a software wallet instead. Software wallets are less expensive and easier to use than hardware ones. However, if you do decide to store large amounts of cryptocurrency with a software wallet (or even small amounts), make sure that it’s secure by choosing one that has been reviewed by security experts and is proven to be reliable over time.

Protect your digital assets by choosing carefully

Choosing a cryptocurrency wallet is not an easy task. You need to make sure that you are making the right decision in terms of security and reliability. Here are some important points to consider when choosing a cryptocurrency wallet:

• Choose your wallet based on its security features. A secure wallet will encrypt your private keys so that no one else can access them, even if they gain access to your device or computer. It also needs good anti-phishing mechanisms, which makes it difficult for hackers to steal information from you by pretending to be another site or company you know about (like Google).
• Consider ease of use and user interface design when choosing a wallet app for mobile phones or computers; this will make it easier for you to interact with the system without having any issues like forgetting passwords or losing money due to technical problems in general. Think carefully about what type of storage options and backup procedures would work best for you; some people prefer storing their coins offline with cold storage methods such as paper wallets while others prefer keeping them online in hot wallets where they can quickly access funds when needed. Consider whether there might be specific situations where it may become necessary for someone else (such as police officers) to access all records regarding transactions made through their accounts—if so then consider setting up two different types of checksums or encryption keys so they can see only certain parts at any given time but not everything at once!
• It is advisable to have more than one storage wallet, such as some on your computer, others on your phone, and even a paper one for backup purposes.

Conclusion

To put it in a nutshell, make sure the wallet you choose checks these 3 essential boxes:

Security — How secure is your crypto wallet? Is it protected against hackers?

Compatibility — Can it be used on multiple devices? Does it sync with multiple exchanges? Does it support multiple cryptocurrencies?

Interface — Is the interface intuitive and easy to use? Is there documentation available?

Choosing the right cryptocurrency wallet is important. It’s your gateway to the world of cryptocurrencies and your portal to the blockchain. Without it, you can’t use or store your digital assets. So it’s important that you choose a secure wallet that supports your favorite coins/tokens.