How to Choose a Crypto Wallet?
Cryptotrader.plus Staff – (01.01.2018)
Cryptocurrency wallets are secure ways to transact in cryptocurrency. They act as traditional physical wallets and help invest, spend, and save your cryptocurrency for you. Selecting a cryptocurrency wallet can be a challenge.
Types of cryptocurrency wallets
Hot wallets are the crypto wallets that are connected to the Internet or which can be found online. They are called ‘hot’ because they allow users to transact using cryptocurrency almost instantaneously. The types of hot wallets are:
- Online wallets
These are wallets that you can access directly on the web browser. But, they cannot be downloaded and installed on your phone or laptop. Examples: Coins.ph, Bittrex
- Mobile wallets
These are wallets that you can download onto your mobile phone. They allow you to transact at the touch of a button. They are more secure than online wallets. Examples: Mycelium, CoPay
- Desktop wallets
These wallets can be downloaded onto your laptop and desktop. They are the most secure of all online wallets, as they store your private key on the computer’s hard drive while allowing you to transact online.
Examples: Electrum, Armory
Cold wallets are those which aren’t connected to the Internet, but which securely store your private key and ledger information on external devices.
- Hardware wallet
This is an external device which functions as a cold wallet. It has a dedicated LCD screen and need not be inserted into any laptop for use. It’s the most secure of all wallets. Examples: Trezor, KeepKey
- Paper wallet
This is a piece of paper where you can print the QR code of your online wallet and keep with you. Although safe, you still need to scan the QR code through an online wallet to use it.
Things to consider when choosing a cryptocurrency wallet
- Cryptocurrency platform/software
Crypto wallets are available both online and offline. If you’re an occasional cryptocurrency user or use a single type of cryptocurrency, choosing a hot wallet is fine. In this case, opting for official online wallets like Bitcoin Core and Litecoin-QT are good options. Exodus and any wallet by Ledger are great universal wallets. Choose cold wallets if you transact very heavily using cryptocurrencies.
- Security level for the cryptocurrency
Cold wallets are user-run, meaning you have a large amount of control in its management and operation. Therefore, security is at its best with offline wallets. If you want a hot wallet, a mobile or desktop wallet is much better than an offline wallet. You’ll also find online wallets which are managed by third parties who protect your private key and your ledger and offer a greater level of security to your hot wallets.
- Features and functionality
The key export facility, coin exchange service, voucher discounts, and prepaid debit cards are some additional features which some wallets provide. Both cold and hot wallets offer these features and it is up to you to decide whether these features matter or not. As a rule, if you transact regularly using cryptocurrency, choose wallets which offer these features. They make transactions much easier and extremely inexpensive.
Golden Rules you need to remember
- Backup your wallet by creating a paper copy of your private key offline
- Use online, ‘hot’ wallets for small change and not large payments
- Use offline, ‘cold’ wallets for large, long-term transactions