Learn all you need to know about crypto wallets in under ten minutes

2 Aug 2021

What are crypto wallets?

A crypto wallet works like a real wallet – except you store your virtual money in it, rather than cash. It’s essentially a bank account for your cryptocurrency. In your wallet are the public and private keys that let you trade your cryptocurrency.

Unfortunately, no wallet can store every cryptocurrency, although some can store thousands. Many wallets exist to store only one coin, like Daedalus, the native wallet for Cardano.

There are countless types of crypto wallet, which can make picking one confusing. Some wallets offer advanced features, while others are more minimalist.

At the end of the article, we highlight a few wallets that are great to get you on your way.

What are the different types of crypto wallets?

Every time you buy or sell any cryptocurrency, digital currency comes in or out of your wallet. Most wallets fall into two categories: hot wallets and cold wallets.

Hot wallets are the most common type of wallet. When you create an account on a crypto exchange like Coinbase or Kraken, you’re creating a hot wallet. Hot wallets are always connected to the internet. This makes them faster, but less secure than their colder counterparts. They are suitable if you want to trade or make regular purchases with crypto.

Cold Wallets
are either hardware or paper-based wallets. They offer the most secure crypto storage solution. They only connect to the internet when you need to add or withdraw funds.    As the name suggests, hardware wallets use physical hardware to store currency. They often look like a USB memory stick but with more functionality.   A paper wallet is a printed sheet with the keys and QR codes used for transferring crypto. To withdraw funds from a paper wallet, you have to scan the codes and transfer the funds into a hot wallet.

Although you can’t hack a paper wallet, it isn’t the most convenient cold storage solution. Most security-conscious crypto investors opt for a hardware wallet for their long-term investments. 

Which crypto wallet should I use?

Choosing a crypto wallet is down to user preference. If you plan on predicting the crypto market’s highs and lows, you’d be better off with a hot wallet.

If you’re a long-term investor, a cold wallet would better suit your needs.

No matter which wallet you choose, ensure it’s a non-custodial wallet. This means you keep the wallet’s private keys.   We’ve detailed the best wallets for new crypto users below.

Cold Wallet – Ledger Nano S

Ledger is a company specialising in hardware wallets. The Ledger Nano S is one of the best hardware wallets for new users. Ledger hardware wallets are multi-currency wallets. This means you can store more than 1500 cryptocurrencies in one drive.

Although the Nano S looks like a USB stick, it’s far more advanced than the humble thumb drive. All your private keys for your cryptocurrencies are stored within the device. To access the device, you need a PIN number, which you manually enter onto the device every time you use it.   You also have a 24-word recovery phrase. This is a failsafe in case anything goes wrong with your device, like if you forget your PIN. If you enter the pin incorrectly three times, you need to enter the recovery phrase.   Recovery phrases are excellent security features that protect your funds if you lose your device.

The only drawback to Ledger devices is the cost – they start at around £50. If you do decide to go with Ledger, make sure to buy direct from the manufacturer. Never buy a second-hand wallet – someone could install malware on the device and steal your money.

Best Utility – MetaMask

 ​Our choice for crypto fans looking for the best functionality is MetaMask.

Metamask is a feature-packed hot wallet. Besides the desktop app, the wallet has a browser extension, as well as a mobile app.   Users can access a range of blockchain services and Dapps (decentralised apps). You can also collect NFTs stored on the Ethereum blockchain, like artworks and music.

It’s easy to use and great for beginner crypto users. You can even trade crypto within the wallet itself. You can also pay for stuff online using the browser extension, which protects your data.

Like other crypto wallets, MetaMask gives you a seed phrase that lets your recover your account if you forget your password.

New crypto users will be better off with Exodus, but MetaMask offers a unique and interesting platform. Any users wanting to dig a little deeper into the crypto world will have a lot of fun with MetaMask.

Hot wallet – Exodus

Exodus is a simple to use software wallet. It’s perfect for beginners. The interface is simple and easy to use, and the platform has an in-built exchange. You can swap between more than a hundred different cryptos within the wallet.

Exodus is simple to use, even if you have no experience trading crypto. It also boasts a 24/7 customer support team.   The platform’s one drawback is its closed source software, which goes against the grain in the crypto space. It means you’re relying on the guys and girls working for Exodus to keep your funds safe.Wallets are a necessary tool for anyone looking to invest in the crypto markets while staying safe. With the right wallet, you can safely invest in crypto and enjoy returns rarely seen in traditional financial markets. 

Register for the prototype

The next step on our roadmap is to ask for your help. We want to hear from you what works and what does not, which features are more important to you and which ones are lacking. In short, we need your guidance.

To facilitate this, we are creating a beta of our platform and are looking for a thousand pioneers to put it through its paces. We will expect a lot of feedback and suggestions from these pioneers over the next two to three months. However, these pioneers are not volunteers, when we launch each pioneer will have bestowed upon them 10,000 edifyqs.

If you see yourself as a pioneer, register for the prototype and explore the future.

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