Introduction
The latest rally in the crypto markets in 2023 has gotten investors to focus back on the long-term viability of crypto as a valuable asset class. As the crypto markets more investors with varying trading goals, most newcomers may be wondering, which crypto wallet to pick to best suit their needs.
There are several types of crypto wallets available today, and the many options can understandably confuse a newcomer. In this post, we dig deeper into crypto wallets and explore their various versions.
What are crypto wallets?
A crypto wallet, despite the nomenclature, is nothing like a physical wallet. Why? For starters, a crypto wallet does not store physical assets and instead serves as a key link to one’s crypto assets. In simple terms, a crypto wallet is an application or device that stores the public and private keys to your crypto tokens. The private keys allow you to access your crypto on the blockchain.
On the other hand, a public key serves as the address for your crypto wallet that can be shared with senders to receive crypto into your wallet.
The passkeys stored in a crypto wallet are very important as they serve as the most important bridge between the owner of the wallet and their crypto tokens on the blockchain. Losing access to their private keys could mean losing access to their crypto holdings forever.
Crypto wallets serve different functions according to the user’s requirements. The most important functions of the different types of crypto wallets are as follows:
- Crypto wallets are a primary requirement to own and store your crypto assets. Monitoring your cryptos and transacting cryptocurrencies without a crypto wallet is not plausible. They act as an interface for you to view your crypto holdings. Hence, a safe and secure crypto wallet is your gateway into the crypto space.
- Crypto wallets are usually required to connect to decentralized apps (dApps). Hence, they act as your identity when you’re trying to connect to dApps and use them.
- Crypto wallets ensure your crypto assets are stored securely. Crypto wallets of repute usually follow certain guidelines and measures to keep your passkeys safe.
- Crypto wallets store the passkeys to your crypto, thereby acting as a management tool to help access your private keys to initiate a transaction on the blockchain.
Types of crypto wallets
Though crypto wallets are further divided into several subcategories, there are three broad types of crypto wallets:
- Hardware Wallets: Hardware wallets are physical devices that you can use to store your crypto tokens. Hardware wallets are considered to be very secure, as they are not stored on your device’s memory and are not connected to the internet. To enable crypto transactions, you must connect your hardware wallet to your computer or any other online device. Ledger and Trezor are two very popular hardware crypto wallets.
- Software Wallets: As the name suggests, software wallets are software or applications on your devices that can act as crypto wallets. It includes crypto wallets, which can be run on your phone, personal desktop, or online crypto wallets built by crypto exchanges. Software wallets hold features like QR codes to enable smooth and easy transactions of cryptocurrencies.
- Paper Wallets: Paper wallets were used at the earlier stages of crypto adoption when crypto holders used to write the keys to their crypto holdings on a piece of paper. With the gradual advent of technologically driven crypto wallets, they are hardly used today.
How to pick the best crypto wallet?
You can pick the best crypto wallet for yourself by keeping in mind the following criteria:
- Support for preferable crypto tokens: The crypto wallet you choose should support the crypto tokens you want to buy or trade. This should be the preliminary step before storing your crypto holdings in a particular crypto wallet.
- Compatibility: You should ensure the crypto wallet is compatible with your usage. For example, a software wallet may come in handy if you’re a frequent trader, and you could opt for a hardware wallet if you plan to hodl your crypto long-term. The crypto wallet should ideally also be compatible with multiple devices.
- User interface and fees: The crypto wallet should have an easy user interface for a smooth trading experience. Crypto wallets may also charge additional fees for storing your crypto holdings, so do check for any hidden charges or fees before choosing a crypto wallet.
- Security features: Your crypto wallet should be secure for the safety of your crypto holdings. Confirm whether it protects your privacy and also follows the required security protocols.
- Transparency: The crypto wallet you choose should be transparent enough to reveal the measures it is taking to ensure enough liquidity and reserves. It should convey all its privacy protocols in use and reveal its management practices in place.
- Features for reinforcement: The crypto wallet should have enough reinforcement mechanisms in place if you lose contact with your wallet due to a forgotten password or a similar event.
- 24/7 customer support: The crypto wallet should have a robust customer support team for immediately clearing all queries and providing solutions to any problems faced while operating the wallet, that too throughout the day.
Conclusion
Ultimately, picking the best crypto wallet for yourself depends on your trading needs. While several types of crypto wallets are available in the market, you should compare a chosen few according to the criteria mentioned above to find one that best suits your needs.
We hope the post helped you learn about the different types and functions of crypto wallets in detail!
Interested in crypto trading in India? Give our website a visit today!
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.
