Investing in cryptocurrencies can be lucrative. If you build up this wealth, you’ll need somewhere to keep it. A crypto wallet is a must.
What is a crypto wallet?
A crypto wallet is the place you store the keys, or passcodes, to your stash of cryptocurrency. Your crypto wallet can be kept online or offline. Once you pull your cryptocurrency off the exchange, be aware that the value of your crypto can still fluctuate.
Experts with SoFi recommend starting with centralized digital currency exchanges for ease of transferring from one crypto to another. If you have decent computer and coding skills, a decentralized exchange will be more secure. However, if you want to change your crypto for a fiat currency, such as dollars or euros, you’ll still have to move it to a centralized exchange.
How does it work?
You can set up your digital wallet when you set up your trading account. If you have a good run, you can move your currency from the trading exchange to your crypto wallet. While this doesn’t guarantee the value will never change, it does prevent your crypto from being lost because the trading website was shut down or got hacked.
Your security needs will determine your wallet choice. The job of your crypto wallet is to protect your addresses and keys from getting hacked. If you print it to paper and store it away, you have the most security. You can use an app on your phone, which is quick and useful as long as you don’t lose your phone. You can also store this data on a hardware wallet or flash drive. Like your phone, you face loss if you lose the flash drive or fail to back it up.
How can you get one?
Again, study your personal security needs. Nervous investors probably don’t buy cryptocurrency; the volatility of this market can be extreme. If you choose to use a paper wallet, you’ll likely need a safe or other fireproof location. For those just starting out on a particular trading digital currency exchange, the online wallet may be ideal. Once you have built up crypto, you can start searching for the best wallet for your trading style.
Remember that your crypto wallet is not the same as your coins. You’re storing your addresses and keys in your crypto wallet to start. Be extremely careful with your passwords, phone, computer and hardware. If you use a flash drive, be certain to back up after each session; don’t start trading without the flash drive at hand to avoid losing your coins.
If you choose to use a phone app for your wallet, be aware that it’s fairly easy to stay away from the shared exchanges offered by trading platforms. When choosing your wallet, take care to use one that doesn’t require a lot of storage. There are wallets you can put on your computer that require you to download the whole blockchain to make any changes. While this is secure, it will take a great deal of computing power.