Crypto wallets make it possible to store crypto coins such as Bitcoin securely. It is essentially a digital wallet for cryptocurrencies. In this guide, we will look at how a wallet works, what types there are and what the best crypto wallets are in 2022.
What is a crypto wallet and how does it work?
A crypto wallet is used to store and manage cryptocurrencies. For example, you can use it to transfer coins to crypto exchanges and trade them. You can also receive money from other people who use cryptocurrencies.
The coins are not stored in the wallet itself. Your wallet is just the gateway through which you can access a certain point in the blockchain network. And that’s where your cryptocurrencies are stored as encrypted information.
There are two types of cryptographic keys for this. One is the public key, which is comparable to your bank account number. Other users can use it as an address to which they send you crypto-coins. You’ll need it when you get coins from someone else, or when you want to withdraw your profits from crypto trading to your wallet.
The other type is the private key. It works like the password you use to access your crypto wallet. This key “proves” to the blockchain that you are the rightful owner of the wallet address and that you are allowed to access the cryptocurrency stored in it. It is essential that you keep your private key secret, otherwise you run the risk of having your money stolen.
Best crypto wallets 2022
There are many different cryptocurrency wallets to choose from. They can differ depending on the purpose and the cryptocurrency. Today we’ll introduce you to some of the best wallets for beginners and wallets for advanced users.
Wallets for beginners
Software wallets are recommended for beginners as they offer a high degree of flexibility and are available immediately. We discuss some wallets that are integrated with crypto exchanges below.
Coinbase Wallet
The Coinbase Wallet is available to all Coinbase users and allows you to store all cryptocurrencies you buy on the platform.
Gemini Wallet
Gemini is a secure wallet for cryptocurrencies. However, it is a hot wallet, which means it only works when you have an internet connection. It is easy to use and therefore a recommendation for newcomers.
Crypto.com Wallets
This is the official wallet for cryptocurrencies on the crypto exchange Crypto.com. It is a so-called non-custodial wallet. This means that you have complete control over all cryptocurrencies stored there.
Wallets for experienced users
If you are an experienced user, chances are you want the highest level of security in the cryptocurrency wallet you use. In this section, we will look at hardware wallets.
Ledger Nano X
Ledger Nano X is a so-called cold wallet that has been specially developed for the secure storage of crypto. It can be connected to a computer with a USB cable. You can also control this wallet with your mobile phone via the Ledger Live application.
Trezor One
Trezor One is another cold wallet for cryptocurrencies that is known for its high security. It has an integrated display that makes it easy to use. You can set up an additional pass value to access it, so the wallet is protected with 2-factor authentication.
What are the different types of crypto wallets?
There are two types of crypto wallets that you have to deal with when you buy or trade cryptocurrencies. The first type is known as a software wallet or hot wallet, and the second is known as a hardware wallet or cold wallet. So that you know exactly what to look out for, we will go into both types.
Software Wallets
Software wallets work via an internet connection and must be installed or launched from a device, i.e. they cannot work alone. There are several types of wallets. However, what they all have in common is that they must always be online for you to use or view them.
Web Wallets – These are wallets that you will usually find bundled or integrated into your account when you set up an account with a crypto exchange.
Desktop Wallets – These are wallets that you need to download in the form of a software package and install on your device.
Mobile wallets – These wallets are specifically designed to run on a mobile device, but you need to download and install them.
Cold Wallets
Cold wallets are so called because you can store cryptocurrencies on them and completely disconnect them from the internet. This means that they do not have a direct internet connection. There are two main types of hardware wallets: hardware wallets and paper wallets.
Hardware Wallets – These are wallets that are usually in the form of a physical device, made of either plastic or metal, and designed similar to a USB stick, for example. Sometimes they even take the form of a credit card, depending on which manufacturer you choose. They can also be connected to a device such as a computer or smartphone. Some even have a built-in LCD display that you can use to control them.
Paper Wallets – A paper wallet is literally a piece of paper with information printed on it. This is usually QR codes that you can scan to check your balance or withdraw cryptocurrency from the wallet.
How much does a crypto wallet cost?
Each brand of wallet has its own costs when it comes to hardware wallets. These are usually the most expensive options because companies have to invest materials, time, effort and research into developing these physical devices.
There are free alternatives such as software wallets on crypto exchanges and paper wallets where you can print out a QR code on a piece of paper. The more money you spend on a hardware wallet, the more features you get, such as an LCD screen.
Conclusion
There are two main types of “digital wallets”, software wallets (or hot wallets) and hardware wallets (or cold wallets). Which one you end up using depends mostly on your specific needs. Software wallets are faster and easier, and if they are integrated into the crypto wallet, there are usually little or no fees. Hardware wallets are slower and inconvenient for fast trading. However, if you want to hold cryptocurrencies for a longer period of time, they are the safest option.
