Crypto currency wallet is used to store pass keys. These keys are used as log in passwords for crypto currency transactions. In simple words, the crypto currency wallet is an application. It functions like the wallets you use to put ATM cards and cash. The only difference between your hand wallet and the crypto wallets is that the wallets hold physical items and the crypto currency wallets hold digital items like private keys, public keys, wallet addresses, etc. There are different types of wallets. Wallets are categorized based on the security features and different other features. In this article, I help you choose the best crypto wallet.
Types of crypto wallets
The two major types of crypto wallets are the custodial wallets and the non-custodial wallets.
Custodial wallets
The custodial wallets are also called hosted wallet. In this type of wallet, a third party hosts the wallet for you. The third party keeps your crypto currency in the wallet on your behalf. The main benefit of using custodial wallet is that there is no risk of losing your holdings.
Noncustodial wallets
The users control the noncustodial wallets completely. You are solely responsible for the safety of the information in the wallet.
Hot and Cold storage wallets
Apart from these two wallets, there are hot storage wallets and cold storage wallets. The hot storage wallet keeps your crypto online. On the other hand, the cold storage wallet keeps your crypto offline. The examples of hot storage wallets are mobile, desktop and web wallets. The examples of cold storage wallets are offline software wallets.
Which type is the best for you?
If you planning on keeping a very few crypto currency, you should probably go for hot storage wallets. Most of the hot storage wallets are free. The cold storage wallets are best suited for users storing large amounts of crypto.
Features to look for while choosing the crypto wallets
You should check on the following features while choosing a crypto wallet:
- Security
- User-friendly interface
- Reputation of the service provider
- Multi-currency support
If you are looking for a highly secured wallet, ensure that the wallet offers two step authentications. Apart from the above features, the wallet should also offer portability. Portability means, you should be able to access the wallet from anywhere.
Other things you need to consider while choosing a crypto wallet
Technologies used
Learn the storage technologies used by the wallets to store your keys. Do they hire a third party? Does the wallet provider store the information on his server? Are there any mishaps in the past? What special technologies do they use to secure your information?
Backup
The wallets should have a backup option. It should have options like rescue links and pass phrases to retrieve everything and run again.
Crypto currency conversions
Like you convert from Dollars to Rupee and from Rupee to Dollars at foreign exchange centres, you can convert from one crypto currency to another. Make sure the wallet you choose offers this feature.
There are several other things you should look for while choosing a crypto wallet. This includes shared account, QR code scanner, customer service, liquidity risk, block chain evolution, etc. However, they are less important as compare to those discussed above.
Hope my article on choosing a crypto wallet was useful! Good Luck!