A significant amount of new crypto traders tend to forget one crucial part of the trader’s world — the wallet. Many of them stay with the default wallet — keeping money in the exchange even later on. But is it the best choice? What crypto wallet should you be using?
How Does It Work?
First of all, you are probably thinking that you can store your money in these wallets. The word ‘wallet’ is misleading in this case. Cryptocurrency wallets are more of a key or a tool rather than a wallet. They are used to interact with the blockchain, but they do not have your money. The wallet provides you with the address and a private key needed for the transaction.
If you are new to the blockchain, you might still feel like this is not as secure as it seemed in the beginning. You must know that as long as you do not disclose your private key to anyone, your money will not be able to leave the blockchain, and you will be able to access it anytime from any device.
Hot & Cold
There are several types of wallets, but even those types are separated into two categories, that would be smart to mention before diving into the whole list. Thus, there are cold wallets and hot wallets. The connection to the internet determines the “temperature” — hot wallets are connected to the internet, while cold wallets are offline. For example, hardware or paper wallets are considered cold, while software or web wallets are hot. Hot wallets are great for convenient, fast access to your money, but there is always a risk for them to be hacked.
Types Of Crypto Wallets
There are five types of cryptocurrency wallets:
This wallet looks like a small USB key with a screen and a couple of buttons. It is offline and has no battery, thus only comes online when you connect it for a transaction. It can support multiple currencies and require your PIN confirmation for a transaction. Needless to say, it is the safest way to store your crypto assets.
Some of the most popular hardware wallets are Trezor, KeepKey, and Ledger Nano S, which by the way, you can get for free while trading (and inviting others to trade) on ROKKEX.
These wallets are installed on your computer and can only be accessed from that device. You have full control of your keys and funds. But that also means that you are the one that has to secure it. You should not only secure your device and the wallet but take care of the backups too.
Mobile wallets are pretty much the same as desktop wallets but in the form of a mobile app. They are easy to use on the go and in physical stores or other places that accept cryptocurrency payments. Of course, you should check developers, community, technology, and security of the app before using one, and take care, once again, of securing your device and the app.
Web wallets run on the cloud and can be your exchange itself or some other website meant to work as a wallet. There is nothing to download, install, or set up. The wallet can be accessed from any device, anywhere, anytime. They are convenient to access and use. However, we highly advise knowing how the owners handle the wallet as they have control over the keys. You need to know what security precautions are taken to protect your funds and keep your transactions safe, also the accessibility options, etc.
For example, we at ROKKEX use a combination of multi-signature Ledger Vault HSM cold storage (up to 95% of funds) and internally developed hot wallets cluster with advanced key management, to keep your funds safe. All of this is important to know, so you would not be sacrificing the security of your money for convenience.
It is what it is. This piece of paper has your address and private key in the QR code form. It is most definitely offline and cannot be touched by any hacker, but it can fall victim to any physical damage as water, fire, or your dog. Also, the transactions from and into the wallet have to happen through the software wallet.
Which One Should You Choose?
You should evaluate what is important to you. Also, nobody is stopping you from trying a few different ones and picking what actually works for you. However, before making a choice, you will have to ask yourself these questions:
- How much security is enough for you?
- How secure are your devices (if you wish to use a software wallet)?
- How much can you spend on a wallet?
- How user-friendly and reliable is the wallet?
- What currencies do you want to store/trade?
- Are you a long term or a short term trader?
Many experts keep saying that the money that you keep in your exchange must be only the money that you intend to trade. Instead, we tried our best to tell you all about the choices you have and things to consider. Some are safer. Some are easier to use. In the end, it is up to you. If you choose to keep it all in the exchange, there is nothing wrong with it, and if you decide to invest in a hardware wallet, we do not think you will ever regret it.
At ROKKEX, we take security extremely seriously, and our crypto exchange is built on ‘Security First’ principle. We want to share our expertise with the broader public for the world to become happy, safe, and wise.
If you have any ideas and suggestions, contact us at