Cryptocurrency is the hot new asset that’s setting the financial world ablaze, and it shows no signs of stopping. We live in an increasingly digitized world, and crypto seems to be perfectly in sync with where we’re going as a society. It all started with Bitcoin (traded as BTC), which was created as an alternative to fiat currency for online purchases. The thing that made it so popular is the security that blockchain technology provides. When you’re purchasing something expensive like a yellow gold Rolex or bracelet from a private seller from another country, security is a premium.
With time, cryptocurrency has become much more of an investment opportunity than merely an alternative to fiat money, and many investors have made major profits. When an investment pays off in a big way, you need somewhere to secure your capital. Since cryptocurrency is an entirely digital currency, you can’t put it in a regular bank account, and that’s where crypto wallets earn their value. Continue reading to learn what crypto wallets are, how they work, and which ones are the best for beginners who are just getting into the crypto game.
What is a crypto wallet?
We put traditional fiat money in our wallets and purses, assuming we haven’t put it into a checking or savings account. Of course, with cryptocurrency being a digital asset, storing it is quite different than storing traditional money.
A crypto wallet is a digital storage device or application for storing information about cryptocurrency. Rather than the currency actually being in the wallet, the crypto wallet contains the location of your capital in the blockchain ledger. In other words, it’s like a digital treasure box that contains a map that leads to the real treasure.
Let’s say you were reading the Rolex Daytona vs. Submariner comparison online, and you decided to add the white gold Daytona you love to your Rolex collection. You even found a private seller online! The seller accepts crypto as a payment method, so he sends you his wallet information. However, instead of that information being an actual bank account, it’s the address of the bank account.
What are the different types of crypto wallets?
There are several different types of crypto wallets. The two most popular types of wallets are hardware wallets and digital wallets on crypto exchanges. Various cryptocurrency exchanges, such as Coinbase and Binance, offer traders a digital wallet, which comes in handy because you have to have a wallet to buy, sell, receive, or spend crypto.
Hardware wallets provide the highest level of security because they’re physical wallets, meaning people can keep their hardware wallets on their person. One of the cons associated with hardware wallets is that you lose whatever crypto have you have in that wallet if you lose the wallet. However, they’re virtually unhackable.
Which wallet is the best for you?
Choosing the right wallet is essential to securing your digital assets and getting the most out of your investment. If you plan on trading crypto and not merely using it for transactions, it’s a good idea to use a crypto exchange wallet. With Binance and Coinbase wallets, you get a private key to which only you have access. However, if you only intend to use cryptocurrency to purchase and sell Rolex watches and other goods, you’re better off using a hardware wallet.
Choosing the right cryptocurrency exchange is as important for traders as picking the right wallet. Coinbase Pro is considered by many to be the best platform for newcomers. It offers the best combination of trade volume, ease of use, and security. Check out CryptoVantage’s Coinbase Review to learn more about Coinbase and how it stacks up against the competition.
Blockchain technology makes cryptocurrency safe for international online transactions, but it’s up to you to store and secure your crypto assets, whether you own Ethereum, Litecoin, or Bitcoin. You must choose the wallet that provides you with the best combination of security, ease of use, and affordability. Now that you know the purpose of a crypto wallet, find the right one for you and fill it up!