Saving and storing any form of traditional currency is quite simple. You go to a bank and deposit the amount you want (if you already have an account that is). Or you could store cash at home in some form of a piggy bank if you really want to. In essence, the options are quite obvious to everyone. This is not at all true for cryptocurrencies at first. They do not have a physical form, so you cannot store them at home. Many banks will not accept them, because of how unstable and unusual they are. This would appear to put any crypto investor in a bit of a pickle. However, the good news is that there are actually plenty of options available. These options are called crypto wallets. However, they come in several different forms, and you have to choose which type is right for you.
Crypto wallet basics
First off, before we get into the types of crypto wallets available, we have to realise how crypto wallets work. First off, crypto wallets work exclusively on electronic equipment, whether this is on a server somewhere or a hard-drive. Generally, you need some sort of a private key to be able to access your account. The unique thing about crypto wallets is that you do not actually store any money. Instead, you actually save the information regarding every single one of your transactions. In this way, it calculates what your overall balance is. After all, it can’t calculate it from any physical assets.
All wallets tend to have very high security in whatever form you get them, but some are safer than others.
Types of wallets
Now we will discuss the types of crypto wallets you can get to store your coins.
First off is a desktop wallet. This will tend to be some sort of program that you can download onto your computer. Your transaction information is solely on your computer. Therefore, this information should be very safe as long as you keep to several key points. Make certain you keep your private key secret and do not lose it. Make certain that no one can access your account. Finally, make sure that nothing can damage your hard-drive. It would probably be a good idea to make a backup and store it safely.
Next up is the mobile wallet, which works very similarly. Download an app on your phone, and use a private key to access your data. The data is, once again, only on your phone, so you have to make sure that you take good care of it. The benefit of using a mobile wallet, however, is that it is, well, mobile. This allows you to pay with cryptocurrencies on the go, by using QR codes.
Online wallets are slightly different from the last two, however. These crypto wallets differ in that they are stored online in a database. You have to go online every time you want to use one, with your private code. The benefit is that there is little danger of losing your information from hardware damage. You also would never have to worry about where you can access it, as long as you have internet access, it will work fine. However, there is some danger of the server being hacked, something out of your control. Generally, these servers do tend to be quite safe because of blockchain technology. However, this is worth keeping in mind if you are cautious.
Paper wallets are the next variety. We may have been generalising earlier when we said crypto wallets are all digital. This type of wallet is about as different from digital as you can get! This type of wallet means printing all of your transaction information on paper through private keys. People generate these keys with a QR code on a website (although it is best practice to generate these while offline). You have to keep track of all your pieces of paper, so you must make sure to store them safely. As long as you do that, it is a very safe form of storing bitcoins, if a tad inconvenient.
Finally, we have hardware wallets. A hardware wallet is a crypto wallet where you save all your transaction information on one bit of hardware. It will have no connection to the internet, and you can only access via the key. Validation of the key is the only time the machine will access the internet, so there would be nothing to worry about. Overall, this is a highly secure way of storing crypto information.
- Trading Instrument