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.
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.
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.
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: walletgenerator.net
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.
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.
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!
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.