What are crypto wallets?

"Not your keys, not your crypto". Remember this statement. 

One of the most common and yet risky places to keep your crypto can be on a crypto exchange. Any third party introduced into any sector increases risk. If something happens to that exchange, you have no right to recourse. One of the benefits of cryptocurrencies is the removal of the middle man - self-sovereignty. A cryptocurrency is a group of codes stored on a blockchain with a particular address. 

Your public key is generated to interact with other users in sending crypto assets. Still, your private key is used for unlocking crypto assets in a wallet. NEVER SHARE YOUR PRIVATE KEY OR SEED PHRASE WITH ANYONE. If you receive an email asking you to send either of these - it's a scam! If you watch or receive an offer asking you to send your crypto or your private keys to them, and they will double your crypto - it's a scam! Be responsible for what is yours. Own it, store it and keep it safe. Mitigate risk by decreasing third-party involvement as much as possible. 

Imagine a crypto wallet as a traditional wallet (Yes, there were wallets before Digi-pay services, does anyone remember them?) It is a place to store your crypto/asset/investment, so it's essential to keep it secure. Crypto wallets are a type of digital wallet specifically used for storing digital currencies. They are applications that help you access blockchain platforms to retrieve and use your crypto assets. Technically, crypto wallets do not store digital currencies, but they connect to the blockchain platform that stores your assets. 

Benefits of crypto wallets

Crypto wallets ensure complete ownership of your crypto assets. They provide faster access and transaction capability. They provide secure storage for your crypto assets and reduce third party risk.

What are the different types of crypto wallets available?

Broadly there are two types of crypto wallets - hot and cold. Let's delve in. 

HOT WALLETS are software wallets that are always connected to the internet, making them less secure than a cold wallet. However, because they are connected to the internet, they are generally more accessible, easy to use and do not require any physical storage space. Nonetheless, they can be prone to cyber-attacks and uninstalling the application can lead to a loss of access and potentially a loss of funds. 

Source: www.101blockachains.com. Click the image to read their article on crypto wallets.

HOT WALLETS come in a few forms - desktop, web and mobile.

Desktop

Desktop wallets are downloadable applications that generate key pairs for safekeeping your assets. Still, users can use a password to increase security. Desktop wallets enable complete control over the ownership of your keys because the keys are stored on the computer hard drive. The programs are available on your desktop or laptop, enabling you to access your crypto whenever your want. No need to go into the bank... Some of the downsides can be - the app needs to update, consequentially taking up hard drive memory, and they can be resource-heavy on your computer when downloading an entire blockchain transaction data. Make sure you have a solid enough computer if you want to choose this option. 

Web

Web wallets do not need to be downloaded and can be accessed anywhere in the world. They often support multiple crypto assets but be aware that additional expenditure may be required when using these wallets. They can also be vulnerable to cyber-attacks because many of them are connected to exchanges. 

If you hold Cardano (ADA) then the Yoroi Wallet web browser works well. Coinbase and Metamask are other web-based wallets. 

Mobile Wallets

Mobile wallets are similar to desktop wallets but made exclusively for mobile devices. Install the app onto your phone, and hey presto - a mobile wallet that is more flexible than a desktop wallet and more secure than a web-based wallet. It is critical to keep a record of your seed phrase and never share it with anyone. Your seed phrase enables you to reboot your wallet if you change devices. Users must be aware that if you lose your device and someone can access your device, then your crypto is vulnerable. Be sure to use good security practices on your device and consider using an old device solely as your crypto wallet. 

Trustwallet and Coinbase wallet are two well-used crypto mobile wallets. 

Source: www.fool.com Article on blockchain wallets. Click the image for further reading.

COLD WALLETS 

The alternative to a "hot wallet" is a "cold wallet", which are wallets that remove your crypto offline, providing high security and essentially act as a vault for your crypto. The amount invested into crypto may determine whether you want to invest in a hard wallet. Hard wallets are like a flash drive where you store your private keys, they are immune to computer viruses, easy to transport (keyring if you want), and you can use them on any device. Transactions must be verified on the device before they are sent, providing an extra layer of security. Even if someone's home is broken into, they could not steal your crypto if using a cold waller. One of the downsides is that they cost money, and it is vital to record your seed phrase and keep it somewhere safe.

Some good hardware/ Cold Wallets are the Ledger Nano X and Trezor.

SUMMARY

To summarise, the most secure storage for digital assets is a hardware wallet. Consider the size of your investment, your investment plan and what type of wallet you want to use.