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If you've just stepped into the crypto world by purchasing your first few cryptocurrencies, you might be looking to know which type of cryptocurrency wallet to choose to store them.
For seasoned crypto enthusiasts, this task is nothing.
However, a newbie who's interested, it can be quite daunting.
In general, there's no hard and fast rule for it.
In reality, it depends on your preferences.
Still, here are some tips on how to choose the best cryptocurrency wallet.
Firstly, let's know what's a cryptocurrency wallet.
In a nutshell, a cryptocurrency wallet refers to a software program that stores your public and private keys which enable the sending and receiving of cryptocurrencies at the press of a button.
Although calling it a cryptocurrency wallet would be a misnomer as it doesn't store your crypto coins, it enables you to interact with the blockchain during transactions.
There is one important thing to consider that a person gets three ways to store their cryptocurrencies: software wallets, hardware wallets, and custodial wallets.
Also, you need to think about storage, which can be either cold or hot.
Hot storage means you choose to store your coins online that may be prone to hacks, whereas cold storage means taking a person's crypto coins and keeping them securing offline.
How to Choose the Best Cryptocurrency Wallet, what are the Types and their Usability?
Custodial Wallets
These wallets get generally used to store your private keys through a third-party.
If someone is a newbie in the crypto world, it's recommended to use a custodial wallet.
Hong Kong-based Bitfinex and San Francisco-based cryptocurrency exchange/trading platform are instances of custodial wallets. And, the wallet comes integrated with these platforms, thus, no need for resorting to other types.
If we talk about the merits of a custodial wallet, a user doesn't need to ponder over remembering their private keys: they only need to remember their login details to access the platform.
Also, it offers quick and easy management of funds.
On the contrary, the bane of a custodial wallet is that it doesn't provide its users with complete control.
However, they certainly offer a high level of security in comparison to others.
Typically, custodial wallets are also hot wallets.
Software Wallets
Based on computer programming, this type of wallet is accessible anywhere.
Mainly, they are available in three formats; desktop, online, and mobile, they are intuitive and provide a myriad of options on the device you use more.
Let's breakdown the types to understand in a more comprehensive manner.
Desktop wallets
The main advantage of a desktop wallet is that you can store it on your laptop or PC. Don't depend on a third-party and provide users with complete access and control to their funds.
However, if we talk about security, it solely depends on an individual's due diligence.
So, if a person's device doesn't have the latest security procedures in place and isn't protective enough against hacks and viruses, it could result in the loss of valuable coins forever.
Mobile wallets
Mobile wallets function through an application on your phone along with providing quicker and easier access when required.
A person's private keys get stored on the application to enable the purchases through the phone.
With the increasing use of smartphones, the use of mobile crypto wallets may experience a steady rise in their adoption.
Online wallets
They are web-based cryptocurrency wallets, accessible from anywhere and on any device.
One of the most convenient types of a cryptocurrency wallet: an online wallet comes with one disadvantage, third-party stores your private key.
Hardware wallets
With crypto coins stored offline, a hardware wallet is one of the most secure ways to store your cryptocurrencies.
Similar to a USB device, a hardware wallet refers to a physical device. Its sole purpose is to store a person's private and public keys.
As you don't need to connect it with the internet unless a transfer needs to be done, there's no chance of it becoming vulnerable to hacks and threats.
Using a hardware wallet is quite easy. Just plug it into your computer, enter the pin, and start transferring or receiving required currency.
In case if it gets lost, you can still upload your funds to a new device using the seed words that come along with the hardware wallet, also used to restore funds.
To conclude
If you want to choose the best cryptocurrency wallet, firstly, outline your preferences, as there's no clear answer.
Eventually, it comes down to what you need the most; convenience, security or ease of use.
Your requirements such as how you utilize your cryptocurrencies, how much you own, and how you plan on storing it, play a crucial role when you set out to choose the best cryptocurrency wallet.
So, we advise you that perform the due diligence to make sure that the one you choose is the best cryptocurrency wallet.
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