Choosing (and using) a cryptocurrency wallet is essential for anyone remotely interested in trying out this new form of technology. With the multitude of different tokens (AKA cryptocoins), identifying which wallet is best can be tricky. In part 1 of this guide, we’re going to examine how to choose the right wallet for your needs before examining how to use the chosen wallet. Enjoy!
Identifying your Needs
Sounds a bit self-help book, but to start off we need to identify what you’re trying to get out of owning some cryptocurrency. Here are some options to get you started:
- Just for fun – I want to own ‘some’
- Trading – let’s make some money!
- Using – I want to use crypto for what it was intended for
Three standard but very different use-cases. Once we’ve established roughly which group you fall in to (it can be all 3, and we’ll get to that later), we want to then ask ‘what value cryptocurrency am I looking to store?’ Options are:
So now we should roughly know which initial category you fall in to, followed by the ballpark value of the cryptocurrency you are looking to store. Let’s break down our options.
Just for fun
If you fall into this category, a web wallet is probably all you need. The cost of a hardware wallet far outweighs what you’re looking to ‘get’ from the crypto world. Sure, if your idea of ‘fun’ is holding $10,000+ of crypto-assets, then you’ll need to revise this (and potentially contact a registered cryptocurrency custodian service), otherwise, we’re ready to take a look at some web wallets.
Here are some examples of web wallets:
Coinbase is what we can think of as the easiest and most basic way to get involved. Supporting both PayPal, card, and bank transfers, it’s incredibly easy to purchase some cryptocurrency and store it safely. Once purchased, you can then leave your crypto in their secure online storage (protected by your password and their insurance policy), or transfer it somewhere else.
The others require you to either store your funds somewhere else, or transfer already bought crypto to them. They also provide a secure, easy-to-use service.
If you’re trading a very small amount of capital, then the above web wallets will also cater to your needs. It is also possible to store your funds on exchanges, such as:
However, it must be stressed that you may lose your funds if you do so (due to hacks). Trading with a larger amount of capital? In that case, a hardware wallet is what you need (or registered crypto custodian, depending on amount). They offer unparalleled security of funds and relative ease of access.
Here are some examples of hardware wallets:
All of these wallets provide what is known as ‘cold storage’ which simply means that they aren’t connected to the internet and vulnerable to online attacks. They are ‘air gapped’ and are not vulnerable to being stolen via the internet. Each hardware wallet company offers a variation on a theme of hardware wallets; from physical to virtual buttons, small/big LCD screens and more. Picking one is more down to personal preference (coin choice) and budget.
And finally, our more ‘practical’ section: using cryptocurrencies as a day-to-day commodity. We want to prioritize ease-of-use as well as safety. Again, depending on the amount of value, we may elect for a simple web wallet to transfer small funds. Larger amounts could be stored and sent via an intuitive and practical hardware wallet.
There we have it: a practical guide to begin choosing the right cryptocurrency wallet for you. There’s never any need to sacrifice the security of your funds no matter your budget; and with more applications coming online every day, the list of accessible storage services will continue to grow. Make sure to check out our other beginner’s articles over the next few months, as well as our other articles and news stories on everything crypto and blockchain.