Cryptocurrency wallets: what are they and how can you choose yours
You must have full control over your Bitcoins, choosing a bitcoin portfolio is an inevitable step. The wallet can be your computer, smartphone, your own hardware or a simple paper wallet.
As a matter of fact, plenty of sites and applications where you can buy bitcoins already offer wallets and you use them easily. But the bitcoins stored there are not really yours because they are stored by third parties and are often an attractive target for hackers.
Why is a wallet so important?
Let’s get to know some of the basics of bitcoin:
- Total control of your money;
- Anonymity, all transactions with Blockchain can be anonymous as long as no one knows to whom the portfolio belongs;
- No need for third parties.
Just like banks, exchange sites buying cryptocurrencies don’t offer any of the above features. Exchange websites are supported by centralized systems that often don’t subject themselves to tight security measures and international standards. You can see here some cases that led to the loss of millions of euros in cryptocurrencies.
Having a bitcoin wallet is the same as having a physical wallet, if you lose it, you lose your money or, if a middleman ends up blocking your funds, you can't use them.
Therefore, you must use a wallet that controls your private keys, usually the seed phase, which are twelve random keywords generated and need to be written on paper and stored in a safe place, in order to restore access to the transaction record if necessary.
Always opt for portfolios developed by trusted entities, which provide the source code, this allows anyone to see what is happening inside the portfolio.
Large quantities of cryptocurrencies must be kept in cold storage, without any internet connection, such as hardware wallets, which are devices that store your private keys or seed phase and allow you to have full control and access via smartphone or computer. For long-term storage, you can always opt for a private key or seed phase written on paper, or more secure alternatives such as Cryptosteel, which can be accessed by inserting the private keys in a wallet.
Our suggestion is to use a wallet on your smartphone (hot wallet) or computer with a little amount of money, in order to use in everyday life, and then your main funds in a wallet hardware or paper wallet.
The different wallets
These will have the private keys or seed phase to access your wallet. There are several for every taste or requirements. Our suggestions for the different needs are:
A safer alternative to paper wallet: Cryptosteel, which allows you to store the secret keys in stainless steel.