Crypto wallets wouldn’t really be needed if people buying cryptocurrencies just wanted to keep them as a speculative investment. Online brokers and exchanges also facilitate the conversion of US dollars, such as bitcoin, which will keep all your digital cash in a secure wallet on your behalf.
However, cryptocurrency wallets (also known as “blockchain wallets”) have been around since the beginning of Bitcoin’s life cycle and have many applications beyond just storing Bitcoins without charging any transaction fees.
Wallets can also be used to store non-fungible tokens (NFTs) and other digital collectibles that can be bought, sold, traded, or transferred to someone else’s wallet. They can facilitate the sending and receiving of digital currency between accounts, cryptocurrency exchanges and digital markets. You have full control over your account, no matter what exchange it was created by such as Coinbase Wallet or Binance’s Trust Wallet. This is because cryptocurrency wallets are often decentralized. You only have the right to track your personal information and the amount of money stored in your wallet, including your passcode and passphrase.
While the idea is simple – you just need a place to store and access your crypto – choosing a crypto wallet can be a very difficult process. There are over 150 different wallets to choose from. Some support only a few prominent cryptocurrencies, while others allow you to trade and store unusual types of digital tokens. Are you ready to start?
Choose a wallet
Your first step is to define your crypto investment goals.
If you are interested in NFT trading, you should get a wallet that supports exchanges like OpenSea, Ultra Rare, and Solanart. Some of these markets operate on a specific blockchain, which may influence wallet choice. For example, OpenSea supports the Ethereum, Polygon and Katyn blockchains; most activity is handled on the Ethereum blockchain and many NFT brokers use Metamask to trade, sell, store and list to buy NFTs obtained through OpenSea. You may have heard of “CryptoPunks” and “Bored Ape Yacht Club”, two of the best NFTs on OpenSea.
For Solanart, which is based on the Solana chain, which sells NFTs like the “Academy of Degenerate Apes,” you should use a wallet that is popular among Solana coin holders, such as Phantom, Solflare or Sollet.
If you are not interested in NFT and are simply looking for a place to store or transfer and receive crypto, check out the best crypto wallets for more information!
Another question you need to ask before choosing a wallet is whether it has a mobile app. Some wallets are designed for use on PCs as Chrome extensions and aren’t as portable as you might expect, especially if they’re not as well established as some of the wallet software mentioned above.
Hardware crypto wallets are an option worth considering if your primary concern is keeping your cryptocurrencies safe. They usually come in the form of a USB stick, which provides an extra layer of protection since it can be disconnected from both your system and the internet. We will talk about this in more detail in the last section. Trezor ($63 to $220 for its two variants) and Ledger Nano X ($149) are two popular hardware crypto wallets.
According to Dave Bitcoin, co-founder of Wallet Recovery Service, a cryptocurrency wallet allows consumers to regain control of their currency without depending on a third party. He recommends researching software and hardware wallets, the pros and cons of which are widely discussed on forums and subreddits. It’s a good tool, he argues, to “ensure consumers don’t complain about usability issues or stolen funds.”
While there is always the possibility that an exchange could be hacked or a digital wallet could contain a security hole that could be exploited, “the first step would be to choose a wallet or exchange with a track record of proven,” advised Dave Bitcoin.
Keep your wallet safe
People who buy and trade non-fungible tokens typically build a type of wallet known as a “burn wallet” as standard operating procedure. If you are concerned that minting (the term for setting up a single NFT) could make you vulnerable to online fraud, you can use a cold storage exchange wallet to temporarily store your coins. If your main wallet is compromised, then only the funds in the recording wallet will be lost.
For example, you can use a recording wallet to buy NFT, then transfer the NFT and any remaining cash to your main account once the transaction is complete, then cancel the wallet. As pointed out by Dave Bitcoin, this method can also be used to spread your crypto across multiple wallets so you don’t put all your eggs in one basket. It’s important to keep track of each wallet though, and as before, remember each wallet’s password and passphrase.
While they do have some downsides, hardware wallets are a great way to ensure that your crypto wallet doesn’t get stolen unexpectedly while you’re not online. If your passphrase and passphrase are compromised, your hardware wallet remains vulnerable even when connected and connected to the internet. They are obviously more expensive than digital wallets, and if you lose your device, you will lose money on that wallet until you get it back with your password and passphrase on the replacement device.
Information stored on portable hardware devices is not completely secure for long-term storage; anyone who lost data on a faulty flash drive or SD card can attest to it. Hardware crypto wallets that store large amounts of cash should have a backup. Similar to how physical wallets can be backed up, so can software wallets.
Software wallets are at greater risk of being compromised, not by a malicious online organization intent on stealing your valuable NFTs, but by user carelessness. You are more likely to trust dubious crypto initiatives or websites that want to hook up your wallet or give bitcoins to scammers who have tricked you than to let someone try to hack your Metamask .