Without wasting much of your cognitive energy, think of crypto wallets as tools required by crypto traders to communicate with a blockchain network. A Crypto wallet is vital for you to store your digital currencies. As such, you can consider the oxygen of your communication with the blockchain network. However, there are different kinds of crypto wallets.
Based on their operation mechanisms, you can regard them as cold or hot wallets. The different kinds of crypto wallets are three. We have the hardware, paper wallets, and software wallet. But most wallet providers use the software approach to make crypto wallets available to crypto traders or investors.
As a result, software wallets are easier to use than hardware wallets, but hardware wallets are more secure. It is impossible to hack into hardware wallets. As for paper wallets, they are now obsolete. This wallet is called a paper wallet because you will print out your wallet on a piece of paper. Crypto users stopped using paper wallets because they are unreliable, and there are better alternatives.
How Crypto Wallet Work
The general belief holds that a crypto wallet is where you securely keep your digital assets. But the truth remains that crypto wallets are only a tool that establishes interaction between you and a blockchain. This translates to the fact that crypto wallets provide essential information that makes it easy for you to send and receive cryptocurrency on a blockchain network. This information includes private and public keys.
Likewise, the wallet contains alphanumeric characters regarded as the wallet address. This wallet address is generated using private and public keys. As such, this wallet address is an exact location where you can send crypto coins to other crypto users on the blockchain. When you share your wallet address, you will receive funds. But don’t reveal your private key.
This private key is also regarded as a seed phrase. It gives you access to your digital assets regardless of your wallet type. With this private key, you can access your digital assets on other devices such as a laptop or smartphone without a compromise. The truth is, coins are not taken away from the blockchain. Instead, users only transfer cryptos between addresses.
Does a Crypto Trader Need a Crypto Wallet?
The only answer to this question is YES. Before sending or receiving a cryptocurrency, you must have a wallet address. This makes it easy to store your crypto and trade it securely. Crypto wallet is required regardless of being a crypto trader or crypto investor that HODL Bitcoin.
There are various options of crypto wallets you can use. The kind of wallet you can use is the hot wallet, a mobile wallet made as a mobile application, a browser extension, or a hardware wallet. An example of mobile crypto wallets includes PTPWallet, Trust Wallet, or MetaMask.
Categories of Crypto Wallets
- Desktop Wallets
Unlike web-based wallets you use on your computers, a desktop wallet is a desktop software you download and run on your computer. There is absolute control over your wallet’s keys and digital assets with a desktop wallet. Upon creating a new desktop wallet, your computer stores a file known as “wallet.dat.” Without this file, you can’t access your wallet. It has information about the private key.
Provided that you lose the wallet.dat file on your computer, there is a high chance that you are losing access to the digital assets in your wallets. This is why backup is crucial. Otherwise, export your private key. This enables you to access your wallets via other computers should yours spoilt or get lost. Generally, it is safer than web wallets. But be sure your computer is free of viruses or malware.
2. Hardware Wallets
If you want to use the most secure crypto wallets, you should have hardware wallets. They are electronic devices and don’t require an internet connection. But as much as they are the most secure crypto wallets, you may expose them to risk if you made a mistake with the firmware implementation. At times, you cannot easily access the funds.
Ultimately, you must use a hardware wallet if you plan to hold your crypto investment over a long period. Likewise, it is advisable to use it if you deal with huge amounts of digital assets.
3. Hot and Cold Wallets
A hot wallet is a crypto wallet that operates with an internet connection. You can set it up in no time, and the funds are easy to access. That is why most crypto traders opt for them because of their convenience. Examples of hot wallets are Binance and PTPWallet.
Meanwhile, cold wallets are crypto wallets that don’t need an internet connection. Instead, keys are stored offline on a physical medium. This makes it impossible for cybercriminals to hack your wallets and cart away your funds. Thus, they are the most secure means of saving your cryptocurrencies. Most significantly, they are suitable for long-term crypto investors.
5. Mobile Wallets
Mobile wallets have the same functions as desktop wallets. But they are built as mobile applications that can function efficiently on your smartphones. They are easy to conduct transactions because you can scan QR codes to execute transactions. As a result, you can easily trade coins such as Bitcoin or receive crypto payments via mobile wallets such as Trust Wallet and PTPWallet.
6. Paper Wallets
While this kind of wallet is outdated, they are also one of the best cold storage alternatives. Although it is powerful against online theft, its risks are one of the reasons crypto users stopped using paper wallets. QR codes carry the private key required to access the crypto wallet for this kind of wallet. But you must know the associated risks if you plan on using one.
Significance of Crypto Wallet Backups
It is pretty tough to lose access to your cryptocurrency wallets. It is hard to control, especially if you have a colossal crypto investment in each wallet. That is why you must conduct a regular backup to save you from serious investment troubles. Crypto users often do this by running wallet.dat file backup or using the seed phrases.
Seed phrases are essential because they allow you to access keys and addresses associated with your crypto wallet. Meanwhile, you can use the password encryption option, but it is also crucial to initiate password backup.
The Best Crypto Wallet to Use
When it comes to the best crypto wallet to use, there is a divided opinion on the best crypto wallet you can use. It comes from the perspectives of a crypto trader and that of a crypto investor who wants to HODL for some time. As such, you can use a hot wallet such as PTPWallet if you are a frequent trader or a business owner who wants to include crypto payment in his payment options.
As a business owner, PTPWallet also offers you white label solutions that allow you to leverage the crypto space to make your business more appealing to your customers. Today, customers want to spend little time making payments for their purchases. With PTPWallet white label solutions, your business will receive the best patronage.
We offer white label solutions such as White Label Crypto Wallet, Crypto Wallet for ICO or Crowdfunding, White Label Crypto Exchange, and White Label Public Offering Solution. Another part of the benefits of our wallet is how it supports over 200+ cryptocurrencies. Thus, PTPWallet presents the best crypto wallet you can use for your crypto purposes.
If you are serious about using cryptocurrency for whatever purpose, you must have crypto wallets. They are the vessels with which you can transfer cryptos such as Bitcoin, Ethereum, and Litecoin. But it is essential you examine the benefits of using some crypto wallets, such as PTPWallet, and understand how they work. As a result, you will use your crypto wallet effortlessly without losing your funds.