If you’ve got your hands on some of your very own cryptocurrency, congratulations. The world of cryptocurrency is weird and wonderful. It’s always progressing, changing, developing.
Most first time investors have bought their cryptocurrency on one of the popular cryptocurrency exchanges that supports fiat currencies such as USD, GBP or EUR.
What you may not realize is that, generally speaking, when your cryptocurrency is stored on a centralized exchange you do not control your crypto. When you control your crypto you can send it wherever you want, whenever you want. However, when an exchange controls your crypto, your transactions are at the mercy of the exchange. If they don’t process your transaction for a week there is nothing you can do.
The solution, much like in the offline world with traditional cash, is a wallet. A cryptocurrency wallet.
What is a cryptocurrency wallet?
A wallet is essentially an address on a blockchain that allows you to store, receive and send your cryptocurrency under your own volition.
Owning and operating your own cryptocurrency wallet is important because it gives you absolute control over your funds. Anyone can send you cryptocurrency and you can send it whenever you want, wherever you want.
There are loads of different kinds of wallets. They all have pros and cons – the wallet that’s right for you depends on what you want it to do.
Hardware wallets are physical devices that plug into your computer. They store your cryptocurrency offline for extra security. These are great for long term holders because they are very secure – when they aren’t plugged in there is no risk. When they are plugged in, the hardware protects your coins.
However, you must have it with you to access your crypto, which some investors don’t like.
Web wallets operate on the cloud and can be accessed from anywhere that has an internet connection, providing you have the details required to access the wallet. They are easy to access but are more risky as you are more exposed to phishing or hacking attempts.
Cryptocurrency wallets that are stored on your smartphone are known as mobile wallets. They are very convenient and easy to use. They allow you to scan addresses to pay, which is much easier than typing in those long addresses. Like web wallets, these are less secure than hardware wallets.
A wallet made out of paper. This is something you can make yourself by generating what’s known as your private and public key using a piece of software and then printing it out. These are fairly old fashion now since the introduction of hardware wallets.
Which cryptocurrency wallet is best?
It depends what you want. Some people want fast access while on the go so they use a mobile wallet. Others are just holding their crypto for the long term, which makes a hardware wallet more appropriate. Find what’s right for you.