Crypto wallets wouldn’t really be necessary if people who purchase cryptocurrencies just wanted to hang onto them as speculative investments. Online brokerages and currency exchanges that facilitate the conversion of US dollars too, say, bitcoin, would hold all of your digital cash in a secure wallet on your behalf.
However, crypto wallets (also known as “blockchain wallets”) have been there since the beginning of Bitcoin’s lifecycle, and they have many applications beyond simply storing Bitcoin without incurring any transaction fees.
Wallets can also be used to house nonfungible tokens (NFTs) and other digital collectibles that can be bought, sold, traded, or transferred to another person’s wallet. They can facilitate the sending and receiving of digital currency between accounts, crypto exchanges, and digital marketplaces. You have full control over the account, regardless of whether it was produced by an exchange such as Coinbase Wallet or Binance’s Trust Wallet. This is because cryptocurrency wallets are often decentralized. It’s up to you alone to keep track of the private information and funds stored in your wallet, including the passcode and secret seed phrase.
Even though the idea is straightforward—you only need a place to store and access your cryptocurrency—picking a crypto wallet may be a very frightening process. There are over 150 different wallets from which to pick. Some only support a few prominent cryptocurrencies, while others allow you to trade and store unusual sorts of digital tokens. Are you ready to begin?
Select a Wallet
Your first step should be to determine a goal for your cryptocurrency investment.
If you’re keen on trading NFTs, you should have a wallet that supports exchanges like OpenSea, extremely rare, and Solanart. Some of these markets run on a certain blockchain, which could affect which wallet you choose. For example, OpenSea supports the Ethereum, Polygon, and Katyn blockchains; most activities are processed on the Ethereum blockchain, and many NFT brokers use Metamask to trade, sell, store, and list for purchase NFTs obtained through OpenSea. You may have heard of “CryptoPunks” and “Bored Ape Yacht Club,” two of the top NFTs on OpenSea.
For Solanart, which is based on the Solana chain, where NFTs such as “Degenerate Ape Academy” are sold, you should use a wallet that is popular among Solana coin holders, such as Phantom, Solflare, or Sollet.
If you don’t care about NFTs and are simply looking for a location to store or transmit and receive cryptocurrencies, Check out the Best crypto Wallets for more info!
Another question to ask before selecting a wallet is whether or not it has a mobile app. Some wallets are designed to be used on personal computers as a chrome extension and are not as portable as you might anticipate, particularly if they are not as well-established as some of the wallet software discussed above.
A hardware cryptocurrency wallet is an option worth thinking about if your primary concern is keeping your cryptocurrency safe. These typically come in the shape of a USB stick, which provides an additional layer of protection because it can be disconnected from both your system and the internet. We’ll go over this in further detail in the final segment. Trezor ($63 to $220 for its two variants) and the Ledger Nano X ($149) are two popular hardware crypto wallets.
According to Dave Bitcoin, the co-founder of Wallet Recovery Services, crypto wallets allow consumers to regain control of their currencies without relying on a third party. He recommends investigating software and hardware wallets, the benefits and downsides of which are widely discussed on forums and subreddits. It’s a good means, he argues, of “ensuring that consumers aren’t complaining about usability concerns or money theft.”
While there is always a potential that an exchange may be hacked or a digital wallet could contain a security hole that could be exploited, “the first step would be to select a wallet or exchange with a proven track record,” Dave Bitcoin advises.
Maintain the Safety and Security of Your Wallet
Those that buy and trade non-fungible tokens frequently build a type of wallet known as a “burner wallet” as a standard operating procedure. If you are concerned that minting (the term for establishing a unique NFT) could leave you vulnerable to online fraud, you can use a transactional cold storage wallet to store your funds temporarily. If your primary wallet were to be compromised, just the funds in the burner wallet would be lost.
You could, for example, use a burner wallet to purchase an NFT, then move the NFT and any remaining cash to your main account once the transaction is completed, and then destroy the wallet. As Dave Bitcoin points out, this method may also be used to disperse your cryptocurrencies among several wallets so that you don’t put all your eggs in one basket. Nevertheless, it’s crucial to keep track of each wallet and, like before, to remember each wallet’s password and seed phrase.
Although they have some disadvantages, hardware wallets are an excellent way to ensure that your cryptocurrency wallet won’t be unexpectedly stolen when you’re not online. If your seed phrase and password have been compromised, your hardware wallet is still vulnerable to being hacked even while it is connected in and connected to the internet. They’re obviously more expensive than digital wallets, and if you lose the device, you’ll lose the currency on that wallet until you retrieve it with your password and seed phrase on a replacement device.
Information kept on portable hardware devices is not completely safe for long-term storage; anyone who has lost data on a defective flash drive or SD card can attest to this. Hardware crypto wallets that store a large amount of cash should have a backup. In the same way, that physical wallets can be backed up, so too can software wallets.
Software wallets have a greater risk of being compromised, not by a malicious internet organization intent on stealing your valuable NFTs, but rather by the carelessness of the user. Trusting shady cryptocurrency initiatives or websites that seek to link with your wallet, or donating bitcoin to fraudsters who tricked you into a scam, are more likely than someone attempting to hack your Metamask.