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July 23, 2021

Why Do I Need A Crypto Wallet? (4 Things You Should Consider)

If you’re a person who asks, Why Do I Need A Crypto Wallet?

Then you came to the right place.

Without a wallet, there is no crypto transaction.

I’ll elaborate a little more as we go.

What is a Crypto Wallet Needed for?

Some form of crypto wallet is needed If you plan on buying, selling, trading, or investing in cryptocurrency. There are different kinds, including ones connected to the internet, not connected to the net, and paper ones. Trading and/or investing goals should be considered when choosing one.

1.) First Things First, What is a Crypto Wallet?

Crypto wallets are programs, devices, or services that you use to send & receive your crypto and also hold your private and/or public keys.

So if you were to think of a crypto wallet (the thing that you use to send & receive cryptocurrency) in the same terms as a P.O. box (post office box) a place where your mail could be sent too.

Then your crypto wallet's public key would be like the address to the P.O. box and your wallet's private key would be like the lock.

Also, along with using a wallet to send & receive crypto, A lot of wallets usually sign or encrypt the information as well.

Now, most crypto wallets differ slightly from one to the next.

However, usually, each one will support more than one cryptocurrency.

So in order to do any transactions involving crypto, you will need some kind of cryptocurrency wallet.

2.) Second, Let’s See the Difference Between Cold and Hot Wallets.

Difference Between Cold and Hot Wallets

The paper wallet is probably the most secure, but least convenient wallet.

Paper wallets are considered to be cold wallets since they're not connected to the internet.

There are certain sites where you can go and generate paper wallets off of.

They produce private and public keys that are printed out on a piece of paper.

The only way to get the crypto after that is to have that piece of paper, so if you decide to get one, whatever you do don't lose that piece of paper.

For extra security, a lot of people using paper wallets will store them in safety deposit boxes or some sort of safe.

Now this is not a recommendation because I don't use paper wallets, but here is a link to a website where you can generate a paper wallet or you can find a different website that generates wallets if you want to, it's up to you:

Next, we have the hardware wallet, which is also considered a cold wallet.

According to (Investopedia) “A hardware wallet is typically a USB drive device that stores a user’s private keys securely.”

They also make mention of the emergence of physical coins.

Now, I have another post where I discuss tangible bitcoins (physical coins), so if you want to find out about that you can click "Is Bitcoin A Tangible Coin" when you're finished with this post and read that one as well.

Now, when it comes to security, after the paper wallet, I’m sure most people would agree that you can’t beat the hardware wallet.

They help protect against malware, phishing sites, and cyber-attacks.

Now your cryptocurrencies aren’t stored on your hardware wallet or any other wallet for that matter.

They stay on the blockchain. Your Private key is what the wallet is securing.

Convenience is another prime factor when it comes to hardware wallets.

Since nowadays most of them are not much bigger than a regular thumb drive and fit easily into your pocket.

So you can take them with you wherever you go.

Now last but not least we have the software wallet.

When it comes to software wallets, we’ll discuss mobile and desktop wallets.

Mobile wallets are considered to be hot wallets because they're connected to the internet and therefore they're not as secure as cold wallets.

Only mobile wallets are downloaded on a tablet or your phone rather than your desktop or laptop.

Now there are mobile wallets that support iOS and some that support Android and then there are those that do both.

One definite advantage the mobile wallet has over the desktop is flexibility.

Although, like mobile, desktop wallets are also referred to as hot wallets (since they're also connected to the internet).

So some desktop wallets work with Mac, Windows, or Linux, and then again there are those that work with all three.

Also, some desktop wallets will integrate a trading platform that allows you to stay in control of your private keys.

Still, you have to keep in mind, with the desktop there is always a lack of portability (the only way to carry it around is if you're using a laptop and that's not too convenient).

One last thing, desktop and laptop wallets are considered to be less secure than cold wallets.

3.) Third, You Need a Wallet to Buy, Sell, or Trade Crypto.

Why Do I Need A Crypto Wallet

If you want to buy, sell, or trade crypto you need a crypto exchange and a wallet.

In the same way, you would need a stock exchange and a bank account to trade stocks.

Crypto wallets are primarily where you will store your public and/or private keys.

When you buy or trade crypto on an exchange or trading platform, some of them give you the option to store your keys in their wallet.

However, you also have the option to store them off of their platform on a wallet that you own.

4.) Fourth, What Crypto Wallet Would Best Suit Your Needs?

When it comes to crypto wallets there are a few to choose from.

So you want to weigh all your options and choose the one or ones that best fit your needs and your investing or trading goals.

You should decide whether your game plan is to buy and hold for the long term or not.

If your plan is to buy and hold, you would probably want to consider a cold wallet.

Since you won’t be transferring crypto very often and those are considered to be the most secure of the two.

However, if you plan on trading a lot or you are fairly new, you might want to keep your keys in an exchanges wallet.

That way you have the speed and ease of doing everything in one place.

Video Version: What Is A Crypto Wallet? 4 Things You Must Know!

So finally, This is How I See it.

Crypto wallets can be like relationships, in that they can either be hot or cold. Except when we refer to wallets being hot or cold, we are talking about security, portability, and ease of use. Also, when deciding which way to go concerning crypto wallets, one should always have their investing or trading goals in mind. If your goal is long-term, you probably want to consider a cold wallet. However, if you are more interested in short-term trading, then you might want to use an exchange or trading platforms wallet. Ultimately it is up to you. So whatever you choose, make sure you take your time and think it through. That way you don’t make any rash decisions that could cost you time and money.

10 comments on “Why Do I Need A Crypto Wallet? (4 Things You Should Consider)”

  1. Thank you for the article. I have been using Coinbase. It is very easy and the vault is cold and supposed to be very secure, plus I don't worry about losing my keys.
    After buying thought the hot wallet on the website or app, I transfer my crypto to the vault. A feature of Coinbase security is that I have to wait 48 hours after requesting a transfer from cold vault to hit wallet. This is great to reduce the risk of theft. However it is not great if I want to unload something in a hurry.
    So I am looking a wallets to be used against other exchanges. Do I really need a wallet to store my keys or just to transact with an exchange?
    Can I just keep my keys in a safe place, digitally or hard copy, online or offline?

  2. Hey, John 🙂

    Thanks for your comment and questions!

    No, you don't have to keep your keys in a wallet and yes you can keep your keys online or off.

    You can store your private key on a flash drive or hard disk drive (HDD) which isn't a wallet, but most people don't recommend it because even though it can be kept offline, they're not that secure.

    However, you can make them more secure by getting an external hard drive and encrypting the data. Here is a link explaining How to encrypt an external hard drive.

    You can also keep your private key on a paper wallet, which there are free ones (just look up "free paper wallets" online or use the link in my article) and generally considered the safest way to keep it if you laminate it and keep it in a personal safe or some type of secure vault.

    Although, if you want to have fast access to trade your crypto, using a hosted wallet like Coinbase's hosted wallet is probably the fastest way to go, but because of security I wouldn't keep more in it than you're prepared to lose.

    Now, these are just a few of the ways you can go.

    So, good luck and best wishes whatever you decide!

    Zach "The Prosperous View"

  3. Good morning!!
    FTX filing bankruptcy after the Fed. Took notice of their racketeering of peoples money…also such a big organization trusted by the crypto community as well as the people who lost from their business practices is stunning and very very scary.
    It is the reason why I’m emailing you….remember I had $50 to invest and so I went with my bank. Current Bank is offering crypto no fees or charges for crypto trading…well I split that money over three cryptos…my Mattic crypto went up $4 from my $20 investment and I thought I better cash in…Sir my account standing was $24 I cash out not only did they take my $4 windfall they also took another $3. So my account only shows $17 this can’t be right or fair but that’s my what windfall. I started with $20 and even in winning I’m left with $17….you can’t get ahead … u win u lose.
    Does this make any sense to you? I complained at my bank and they said I have to take it up with the crypto company. I ask for their number or email because that information is not given on their crypto exchange.
    After two days I get a email saying a company called Zero Hash LLC is the crypto people for current. After further searching they don’t even have a crypto app and as of now I got no one to talk to their about their policy of 0/trade etc. and why they took all my winnings plus $3. They are cheating the public This can’t be a standard ?

  4. Hey SL,

    Yeah, I know about FTX.

    Now, since the founder of FTX, Sam Bankman-fried hasn't been convicted of anything yet.

    I'll say, it looks like it all just boils down to a common thief "allegedly"

    Just like a lot of other thieves, such as Bernie Madoff.

    Now I haven't checked, but I'd be willing to bet that something like what Madoff and Bankman-fried "allegedly" did, has probably been done in every other asset class there is.

    So we'll have to wait and see how it unfolds; but I don't think it was because of the safeness of the crypto market or cryptos in general, just old fashion thievery, again "allegedly".

    Also, that's why even though I don't give out investing, trading, or financial advice, in my last comments I said if you did decide to invest, please don't invest more than you can afford to lose, and definitely do your due diligence beforehand!

    Furthermore, things like the FTX situation, are one of the reasons that I handle all my crypto transactions myself and always store my crypto in a cold wallet (offline).

    I'll also be waiting to see how things play out in the future, such as regulation and whatnot.

    Although, no matter what happens, and this isn't an endorsement; I'm pretty confident in bitcoin, ethereum, and in the longevity of the blockchain and the role it has, and will play in FinTech.

    But to get back to your situation; I personally have never come across anything like this in my crypto dealings, but I am very sorry to hear that this happened to you.

    Furthermore, where you're bank is concerned, if they said they don't have any charges or fees to buy, sell, or trade crypto, then they definitely shouldn't have charged you anything.

    But even if they did have a fee to buy and sell the crypto, this is typically a fee of about 1 to 1.5%, notwithstanding any other charges.

    So, if you bought $20 worth, even at 1.5%, that's only 30 cents to purchase, and if you add the $4 in profit that you said you made to the $19.70 (your initial amount minus the 30-cent fee) you get $19.70 + $4 = $23.70, and then you subtract the 1.5% fee to sell, you should still end up with about $23.34, not $17.

    Now again, I'm not advising you on what to do, but if it were me, I would definitely contact my bank to see what happened and try to get them to help make it right; since you said the bank claimed there were no fees or charges and that they were the ones using the company that you bought the crypto thru.

    I really hope you get this all worked out!

    Zach "The Prosperous View"

  5. I apologize that my last email to you came up two times…when I sent the first one the window got stuck for some reason and I didn’t think it went thru is why I sent a second one. I received tonight a email from you but it wouldn’t open up. I check and everything working correctly on my in. Is it possible for you to resend your reply … and I hope my commits about the company that I purchased some crypto thru and the results of that was appropriate to mention and ask your opinion?
    Slow Learner

  6. I sent the email again and yeah, it's definitely ok to comment and ask my opinion, I welcome it!

    Just as long as it doesn't involve asking me for advice or direction on your trading, investing, or any other financial decisions.

    P.S. You should be able to see my reply to your previous comment now and I hope you get this all taken care of soon 🙂

  7. Great!! It’s working!!! Yea!! I called the bank a few times and they sent me a ledger of my account. Problem is, it doesn’t show my buy out price only that I paid $20 for a crypto and the balance of the crypto. Then they had nerve to ask me for a screen shot of the purchase. What!!!! A screen shot it should show on this ledger the sell price of that crypto at the time of sale. I feel sorry for all the other Current Bank customers who also are going thru this…I’ve been with this bank 2yrs and never had problems logging in until I told them two days ago on three different occasions that this isn’t right…why can’t you give me their contact information since now u are telling me to contact them….brother no answer … customer service is telling me now they have nothing to do with crypto trading … can u believe that!!! Your bank is posting customers about buying crypto their and u are telling us you have nothing to do with the trades and buying of it…Dude I’m hot!!!

  8. Yeah, it doesn't really make sense to me either.

    If you're buying crypto through the bank and it's using this company as a way to get the crypto, they should definitely help you resolve the issue!

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