With the crypto market in acceleration mode, new user interest has never been greater. Yet, so many folks are still grappling with where to store their digital stash.
If you have spent any time in the crypto constellation, someone has probably shared their opinion about the merits of one wallet over another. But if you have too many voices in the room, it can become very confusing.
So here are five tips that can be useful when navigating through the crypto wallet noise:
This seems obvious yet so many people don’t take it seriously.
Here are a couple of thoughts. For starters, when choosing a wallet, make sure that you have control of your private crypto keys. If not, you are one step closer to losing the money.
Second, find a wallet that allows you to establish two-factor verification. Most importantly, be sure to activate it. Finally, be sure to write down your recovery phrase and secure it in a safe place. A password app like LastPass or Dashlane are good options.
HOT, HOT… COLD?
There are two primary types of crypto wallets: Hot and Cold
A hot wallet is software you download and it is connected to the internet. While it may seem convenient, you need to be extra careful with these types of wallets. It is well known that many scammers re-create wallet pages for you to download their malicious software and steal your money.
Learn how to verify the GPG signature of the wallet before installing it. It may sound like a daunting step but it can help you steer clear of so many headaches. Electrum and Exodus wallets are some of the best choices you could make here.
Despite the benefits of hot wallets, cold wallets can often be a better option. Cold wallets are pieces of hardware that securely store your cryptocurrencies. They do not require a connection to the internet.
In order to send money from your wallet, you will need an OTG cable, or connect it via a wireless connection. You also have options like the Cobo Vault, which is air-gapped, meaning that is 100% offline.
The best cold wallets in my view are Trezor and the aforementioned Cobo Vault.
Imagine buying a few cryptocurrencies and not knowing how to use them because you don’t understand your own wallet.
It sounds terrible, but it might happen. Your wallet should be fairly intuitive. If you don’t understand how to use a wallet in less than 15 minutes, it’s not a good choice for you.
Remember, that’s where your money will be. And your wallet is there to save you headaches, not make them worse.
Your wallet should be like an extension of your money. It should be as easy to use as unlocking your mobile phone.
While the blockchain is public, your money and your identity are not.
Cryptocurrencies were born identity-free. So if you download a wallet and need to complete a Know Your Customer (KYC) process, that in my view is not a good wallet.
And speaking of anonymity, look for a hierarchical deterministic wallet. HD wallets generate an unlimited number of addresses every time we use them. When we don’t reuse addresses, it is more difficult for someone to track our money.
Keep in mind that you should not have to reveal your identity to download a wallet.
Most often than not, the wallets you will find these days will support multiple cryptocurrencies and tokens. This feature is really convenient to diversify your portfolio.
But, maybe your investment plan only contemplates one cryptocurrency. Let’s say you are a bitcoin maximalist. You don’t need multi-coin support. Your best option, in that case, is to find a wallet to hold only the coin you want.
Doing so could prevent you from sending your money to an address that doesn’t support the currency.
All in all, there is no perfect wallet. The best wallet to choose is the one that will fit your needs. Keep in mind the tips we just explored and you’ll be able to find your crypto wallet rhythm.