When we hear the word "wallet," we think of the purse or bag accessories that store our cash, IDs, credit and debit cards. Digital currencies, unlike cash, are not held in a specific place and do not exist in material form. Cryptocurrency balances and transactions are on the blockchain or a related technical base.
What is Crypto Wallet and How Does it Work?
A cryptocurrency wallet is software that enables users to store and manage their digital assets. As with conventional currency, you don't need a wallet to spend your money, but it certainly helps you to keep your money all in one place. So, cryptocurrency wallets are required to send, receive, store, and monitor your cryptocurrency assets.
A cryptocurrency wallet provides and maintains your private and public keys, interacts with the blockchain, keeps track of your balances, and allows you to transfer and receive money.
Types of Crypto Wallets
There are many types of cryptocurrency wallets and each of them has its pros and cons. There are 2 major types of crypto wallets: hot and cold.
Hot Crypto Wallet
Hot crypto wallets are also known as software wallets. They create and store your private keys online. Hot wallets include desktop or mobile app software that is connected to the internet.
So when you set up these wallets, your private key is generated in a "hot" device, which just means it's connected to the internet, which could be vulnerable to hackers.
Cold Crypto Wallet
Cold wallets are also known as hardware wallets and store your private keys offline. They are designed to safely create and store your private key offline. When sending, receiving, or managing your funds using the cold wallets, you will need to use a hardware device and go through more secured steps which makes the funds less vulnerable to hackers.
By using hardware wallets to generate and store private keys, you protect your assets from hackers and other potential security threats that hot software wallets are more prone to experience.So, storing your cryptocurrency on a hardware wallet is the safest, most secure way to manage your funds. However, there are some hot wallets that are extremely safe and help you to securely store your crypto using highly secured security technologies.
What Crypto Wallets are the Best?
There are few good crypto wallets you might want to try out. However, the ones I would recommend are Coinbase wallet, CoinSpace wallet, and MetaMask.
CoinSpace wallet is the safest crypto wallet sofware and comes with the strongest security features. It is highly secured and widely used with over 24 million wallets created on its platform, $120B+ transacted and offers the lowest fees in the industry.
How to Set Up Your Crypto Wallet on Mobile Phone
Let’s explore how to set up a Cryptocurrency wallet, step by step on your mobile phone. We will use the CoinSpace wallet as an example because it is the most popular and secure crypto wallet.
- Go to the google play store or the app store and download the “CoinSpace wallet app.”
- Create your new account
- Generate your passphrase. It helps keep your account secure and lets you open your wallet on multiple devices.
- Confirm that you have written down or otherwise securely saved your passphrase. We strongly recommend you write down your passphrase and keep it in a secure location. It’s presented as a random 12-word phrase. Your passphrase will not be shown again and if you lose or forget this 12-word passphrase, you won’t be able to access your crypto.
- Enter the corresponding passphrases. Then set a 4-digit pin for quick access to your wallet. You can also choose to enable your biometrics.
- Transfer crypto to your wallet to easily buy, sell, and exchange your preferred crypto coin.
How to Set Up Your Crypto Wallet on Desktop
Setting up a crypto wallet on the desktop is also simple and straightforward. We will be using the Crypto.Space platform as an example here too.
- Go to Coin.Space in your desktop browser
- Select “Web wallet” or download your coin wallet setup
- Open an account
- Keep your unique passphrase. This is your only way to access your wallet account. This phrase cannot be recovered if it is lost, so it is critical to keep it in a safe place. From here, you’re ready to send and exchange tokens with your wallet.
Cold wallets are the safest way to store your crypto assets since they are less vulnerable to hacking. If you intend to use reliable hot wallets, you should base your decision on crypto wallets that are both inexpensive and, more significantly, safe for storing your hard-earned crypto assets. The bottom line is that a hot wallet is only as secure as the cloud or network on which it is built.