If you are already thinking about a Cryptocurrency wallet, then you have probably navigated around some bumpy tides on your way to understanding that having your own wallet is what make the coins yours. You are in control.
You must be chuckling when you hear terms like ’bitcoin,’ ‘mining,’ ‘mining pools,’ ‘hash power,’ ‘altcoins,’ ‘cryptography’ and the like, remembering how many donkey hours you spent just wrapping your head around them and wondering what the heck they have to do with money.
And don’t even get me started on ‘immutability,’ ‘soft forks’ and ‘hard forks.’
Man, this blockchain concept is super crazy! And yet, for those who understand money, it is exhilarating at the same time!
Because we have lived with several money pains for long that we would like to see removed by this new blockchain technology. But I digress.
This article is about how to store your Cryptocurrency. After you read this, you will be able to buy, securely store, exchange and move your digital portfolio easily.
Table of Content
What is a crypto wallet?
When you think of your physical fiat currency wallet, you think of storing paper money, business cards, some mugshots of loved ones and other interesting valuables.
For the uninitiated, fiat currency is government regulated money like dollars, pounds, etc.
I have heard of tissue paper and some quite unmentionable ‘accessories’ in wallets!
A Crypto wallet is only similar to fiat wallets in that they store money. From there, things start to get interesting;
- They are as digital as the currencies they store.
- They can be online (‘hot’), or offline (‘cold’).
- Some of the little buggers are quite choosy. Some wallets like Bitcoin Wallet, Bitcoin Core, and Aegis store only bitcoin, and you may have to change any other crypto to bitcoin and then send it to a bitcoin wallet if you are using it primarily to store bitcoin long-term
- Some can allow coins to be interchanged inside the wallet (they have to be ‘hot’ for that to happen).
- They have public keys (more like the way your wife can see your Crypto wallet lying on a sidewalk and exclaim “Hey, that wallet belongs to my hubby!” …
- …and private keys (picture a combination that only you possess, that unlocks the safe that carries your money, or your signature when issuing a cheque). Private keys are the digital signatures that combine with your wallets public keys to make your transactions verifiable as valid.
While I am on private keys, HEAR THIS;
You must never share your private key with anyone because that allows them access to your hard earned crypto! Another thing is that you should NEVER lose your private keys! If you do, you can forget your digital money because there are no password recovery systems in the blockchain world.
I know of a fella who has built a metal box, stashed printouts of his paper wallets, taken the box up-country and hidden it where no one except his mother knows.
How do you protect your Cryptocurrency.
What happens to your cryptocurrency is entirely up to you, and this is true even in traditional banking. Do you want to save it? You simply put it somewhere safe and do nothing else.
Do you want to multiply it? You put it in a mobile wallet and go to the market either to buy something more valuable to you or to lose it through gambling. You can also choose to squander it, and that would be a good choice too. Because it is your choice.
Wallets are designed to assist you to make that choice easier to implement. Some of the most common uses of cryptocurrency are;
- Long-term holding; If you are looking to hold your bitcoin for the long term, Nakamoto style, then you need the most secure cold storage for it. And by the way, how can anyone keep a million bitcoins untouched for a decade, even if they founded bitcoin? Makes me shudder with wonder!
- Short-term speculative trading; If you want to trade across cryptocurrencies, you could hold your tokens in a wallet that supports the other tokens you are interested in. Many people leave there Bitcoins or Cryptocurrency on the exchange where they purchased them. This is common especially amoung people who just dont want to put in a bit of time an understand wallets. Its is an easy solution but come with the risk of the exchange being hacked and losing your coins.
- All of the above; sometimes you want to do a little of each of the above options, and this means that you must ensure that you have a wallet for each of these functions.
When we finally check out the available wallet types, you should now be capable of identifying these properties quicker.
4 Main Types of Wallets
There are several types of Cryptocurrency wallets. A good way to study each of them is to check what tokens they support, customer reviews, what you can do once inside the exchange and how you can upload or download your cash.
Wait: Did I just drop another cryptic term?
A token is simply any form of underlying asset that is used within a unique project that is built on a blockchain. For example, if you want coffee shops around the world to use a unique cryptocurrency that allows coffee lovers to identify with the brand, you can introduce Cofficoin (CFC) through an application on the Ethereum blockchain.
Once any coffee house starts accepting CFC, you can load up CFC on your wallet and use it to buy coffee in that shop, or any other around the world that accepts CFC, any time you visit.
Psst; don’t go looking for CFC. It doesn’t exist. That is me thinking wildly, and if you develop CFC you will probably immortalize this daydreamer!
1. Web wallets
Most newbies want web wallets. With these, they learn baby steps into crypto trading before they plunge into the deep sea of portfolio holding. These wallets are also the avenues by which you convert fiat currency into crypto as most are connected to exchanges.
However, most are hackers’ cannon fodder because they are visible on the world wide web. They are also susceptible to phishing and insider attacks.
To protect your satoshis, keep your antivirus up to date all the time and avoid going to X-rated and other ‘private’ websites. They will scam you with phantom programs and malware attacks as you sin!
Examples of web wallets
Cex.io: An interesting exchange that allows you to buy cryptocurrency using USD and EUR by sending through Master/Visa cards, Swift, bank transfers or by using other cryptocurrencies. Cex.io has excellent customer reviews, high order book liquidity which allows quick transactions between top cryptocurrencies and good security for your deposits.
LocalBitcoins: One of the quickest (and probably most expensive) way to acquire and sell bitcoins. It is peer to peer, meaning that you get to be stung by your fellow countryman. It uses an escrow protection that holds the coin from an online seller to allow you to buy directly.
Why are the prices on localbitcoins.com higher than others?
Local bitcoin does not control the price of buying or selling bitcoin on its platform. This is done through silent bidding, where sellers try to compete price wise. But a quick check will tell you that the prices they offer are consistently higher by up to 15% of the price you find on www.coinmarketcap.com, which is the world’s ranking site for market prices for corn.
Poloniex: It is also a peer to peer exchange like localbitcoins, but it allows a much wider range of tokens to be bought and sold.
Coinbase: It allows fiat to crypto purchase using debit cards, visa card, etc. and then you can exchange them inside the wallet.
Bittrex: Although suffering from a chronic case of poor customer service and long confirmation wait times, Bittrex is one of the more established online crypto-to-crypto exchange services. Their wallet requires a two-factor authentication and therefore offer better security than most online wallets.
2. Mobile wallets
Mobile wallets allow you to have mobility with your crypto. They are susceptible to pick-pockets just as much as the phones they are installed on, so you need to store the private key somewhere very secure just in case you lose your phone. Also, do yourself a favor and avoid unsafe places!
3. Desktop wallets
While it is advisable to put your desktop wallet offline in cold storage, some desktop wallets offer online functionalities like coin exchange.
If offline, you can stow away your stash in a desktop that needs no maintenance, is offline and is password protected. Avoid geeks on that desktop if you want your loot to be safe! Don’t keep your private key in, say, a word document in the same desktop or laptop!
4. Hardware Wallets
There are two main types of hardware wallets
Digital Hardware wallets
I advise you to Click here and learn more about hardware wallets. And get yourself one. They are good accessories and a wise choice of wallet for long-term holding. You can thank me later.
Yes. Old School style. Paper wallets can even be handwritten, but most are printed. It is a paper representation of any other of the wallets we have above, but the best ones are kept in cold storage for long-term holding.
It is not a crime to have two or more multiple crypto wallets.
In fact, it is a very good idea when you learn the business idea behind other cryptocurrencies and become an astute coin speculator and buyer. This allows you to spread your risks. If you buy tokens that represent a business idea that you know will scale well in future, you are sure the value for your currencies will rise as more people become aware of the concept and demand for the underlying token.
When starting, choose exchange wallets that that accept your fiat currency, and then quickly move your tokens to a more secure wallet, most likely cold storage like desktop or hardware wallets.
Don’t keep your private keys in risky places. If it means having them stored in several safe places, so be it. You can safely have your hardware wallet as your car key holder or design a pendant for it. Some wallets like Aegis are nicely crafted for wearing.
Get crypto wallets that are compatible with what you want to do with your portfolio. If your main intention is to hold a currency long term, put them in cold storage, offline, in a hardware wallet.
If you want to select different hardware wallets, click here to learn and order.
Wallets are simply accessories to this incredible odyssey we are cruising in on the crypto island!
Now that you have some basic knowledge on crypto wallets, please check out our reviews here, and go to one of the popular verified exchanges or brokers.
Input your country and you will be given the options available plus detailed reviews to help you choose what is right for you.
Once you select a place to purchase Bitcoin or other crypto you will also find wallet options and easy to follow instructions.