Virtual currencies have not really been a novelty that people are unfamiliar with for a while now. Actually, they are over ten years old, and a decade in the world of tech is an eternity if we take into consideration how quickly things tend to change. Since cryptos are also about finance and doing business, things are a tad bit different so they have stuck around and kept being in the spotlight for much longer than other new technologies and devices.
While it can be argued that getting in on the fun right now and trying to take your piece of the crypto cake is much more difficult than it initially was, numerous people are still taking the decisive step and opting to invest in and trade with cryptos. It is never a bad time to do it, but only if you manage to do it the right way. To start off strong and get to a point of earning more than your competition sooner, you need to go through the basics and set everything up accordingly. In this article, we help you with one of the basics that will help you dictate your success in this field.
Have you heard off crypto wallets, or electronic wallets? Probably, just like you heard of mining, blockchain, and other technical terms that surround the cryptocurrency world. Well, this is where you need to start since this wallet is the thing that helps you keep your balance safe and where you will store all of the different tokens you come across. Read on carefully to learn more about these wallets and be sure to check out Crypterium for one of the best wallet solutions available on the market.
What is It?
Cryptocurrency needs to be stored somewhere, despite being digital in nature. Just like you keep your credit or debit cards and cash in your traditional leather wallet and in your pockets, there has to be a dedicated place where your digital assets are safe and secure. A digital wallet can be many things, or rather, it can come in many different types. The most important distinction to know is that they can be either hot or cold. This terminology refers to them either being connected to the internet or not. Hot wallets are in some way connected and can be accessed if you have internet access, while cold wallets exist off the web and the users access them online.
Another possible distinction is the one that separates wallets into hardware and software. This is an easier one to follow and it makes more sense. Hardware wallets are the cold ones discussed above, meaning they store your keys on separate devices like hard drives that have no web access. They can also look like USB flash drives. Paper wallets also exist, which are basically pieces of paper with the keys printed on them. Hardware wallets are the industry gold standard for ultimate protection because they cannot be hacked into. However, one could misplace them or have them stolen, and the investments on them are unrecoverable.
Software wallets are the hot variety, connected to the internet or only accessible through it. If you think of regular wallets for your fiat currencies as the hardware wallet, then the software wallet is your bank account/app. They exist on and are accessed through mobile devices or computers. Additionally, software wallets can also be web services and websites. Crypto exchanges also have their own. The biggest downside to them is that they are quite risky to be the sole type of wallet you use. There is a much higher risk of cyber-attacks that with cold storage solutions.
Should You Get One?
In theory, an average investor does not really need a dedicated wallet other than the one they get by opening their trading app or registering with an exchange platform. You do not have to keep your coins and keys in cold nor hot storages if you do not want to. However, it is advised and it is the industry standard to have at least one of each. Most of the experienced and successful traders and investors have multiple, for example one of every type. In case something happens, their eggs are not in one and the same basket so they are able to recover more easily.
When it comes to being smart and doing the right thing, there are a few reasons why you should get a crypto wallet. The most obvious one of them is safety and security of your balance. Moving your crypto into your own wallet from where you initially buy it or trade for it is prevalent for your well-being in the industry. Since there is no regulatory body, like when banks and their systems and laws protect your cash, there is no saying what could go wrong in case of a cyber-attack on the platform where you do business. Having your own wallets is the only backup and the best chance you have to counter this.
Then there is the ease of access and use. The user-friendly factor of the wallets is quite high, particularly with hot wallets in the form of mobile and desktop apps. They can be your one-stop places for everything crypto related, from news and trends to doing the actual work. Controlling your private keys, sending and receiving currencies, interacting with potential partners, and looking for new deals and crypto value changes are all the things you can do on some hot wallet solutions. With cold varieties, you get to reach for them at your own time and pace, whenever you need or must. This gives you all the control and keeps it in your hands.
Conclusion and Takeaways
Basically, there is no way to answer the titular question with a simple and universal answer. There is no wallet that works for everyone. For this very reason there are multiple different ways to do things and either be connected to the web or not. However, we would advise you to have at least one personal wallet that suits your needs and that will help you do business the right way. Keeping cryptos where you bought them is good initially when you are still learning things. However, thinking long-term is smarter which is why you must eventually move them to a more secure location, your own personal crypto wallet.