Do you want to get in on the Bitcoin craze or other cryptocurrencies? If you want to begin trading, you are going to need a cryptocurrency wallet. A cryptocurrency wallet, or a crypto wallet or Bitcoin wallet, acts like a traditional wallet. Unlike paper currency, a cryptocurrency wallet holds proof of your digital cash. It stores private and public keys to buy Bitcoin or other cryptocurrencies. It gives digital signatures authorizing each transaction you make. These wallets can be a device, a program on an online website or on an app, or a service given by crypto exchanges. Keep in mind that you will need to keep your private key safe and secure. It allows you to unlock your digital wallet in order to spend or trade your cryptocurrency.
What are Bitcoin Wallets?
Many exchanges will provide or suggest crypto wallets for you to use in order to trade or buy Bitcoin or other cryptocurrencies. You will need to have a wallet address so that the digital currency can be transferred to your own control. Most of these crypto wallets are protected by a password and offer other security features such as two-factor authentication and encryption.
These digital wallets come in many formats. Each of these versions has pros and cons when it comes to how easy it is to use and their security features. However, security ultimately comes down to your own individual actions. You need to make sure to guard the passwords that give you access to the wallet.
Bitcoin wallets generally come in two forms: cold storage or hot storage wallets.
A cold wallet is a small, encrypted portable device that lets you download and carry your Bitcoin and other cryptocurrencies. These wallets can cost up to $100, but since the cash is stored offline, they are considered more secure than hot wallets. Two different providers are Trezor and Ledger. Trezor offers small, key-size cold wallets that range from about $60 to $200. Ledger is designed like a thumb drive and they offer cold wallets that range from about $60 to $120.
Hot storage Bitcoin wallets are connected directly to the internet through platforms such as a phone app, desktop software, or an online provider. All of these services are free, but they all contain a security risk since they are connected to the internet and can be susceptible to online theft. However, exchanges and digital wallet providers are getting better and better at combating crypto crime. Despite the growing headlines about cryptocurrency theft, accordion to CipherTrace, a blockchain security and analytics firm, theft dropped 57% in 2020. With this being said, remember that digital cash in a digital wallet still is a target for thieves.
Mobile wallets are apps on your smartphone that store and control your bitcoin funds. For Android and iOS, mobile wallet operating systems are the most convenient for in-person payments and the use of QR codes to make fast payments. Similar to desktop wallets, you will be responsible for backing up your device to keep your digital cash safe. Some popular options include GreenAddress, Bitcoin Wallet, Mycellium, Atomic Wallet, BitPay, and Exodus.
These are apps that run on your computer and store your cryptocurrency on your desktop computer. You have complete control of your funds through this wallet so you won’t have an issue with a third party that can lose or freeze your funds. However, security is up to you so you need to make sure to back up and secure your wallet and make sure your computer does not have malware. Some popular options are Bitcoin Core, Atomic Wallet, Electrum, Exodus, and BitPay.
Web wallets offer browser-based wallets that you can use on your mobile or desktop but don’t give you the full control that traditional mobile or desktop wallets offer. Exchanges like Coinbase and brokerages that offer cryptocurrency like Robinhood give users web-based wallets.
Now you have to decide which Bitcoin wallet is best for you. For cryptocurrency traders you own a lot of assets, a combination of hot wallets that can be used for quick trading or purchases and cold wallets to secure the majority of cryptocurrency resources is best. However, assets like cryptocurrency are going to be extremely volatile as it is. You should never trade or own more than you can afford to lose.
Some online brokers also offer bitcoin. Coinbase lets you buy and sell more than thirty cryptocurrencies. eToro is a trading platform with access to fifteen cryptocurrencies. Robinhood offers seven cryptocurrencies such as Bitcoin, Ethereum, and Bitcoin Cash. SoFi Active Investing offers three cryptocurrencies including Litecoin, Ethereum, and Bitcoin. TradeStation offers five cryptocurrencies including Ethereum, Bitcoin Cash, and Bitcoin. Finally, Waybill offers four cryptocurrencies including Ethereum, Litecoin, Bitcoin, and Bitcoin Cash.