What is a crypto wallet?

Crypto wallet only provides you access to coins that are being stored on the blockchain through private keys. So if we would try to create some kind of a definition for the crypto wallet it most certainly would be "a private key storage".

The key function of a crypto wallet is fund management. By accessing your wallet through private keys you can start managing the funds that you own. The private key is a password for your crypto wallet. By knowing and typing in the private key you receive the ability to move funds from one address to another.

Let's figure out what kind of crypto wallets are out there. There are only two of them in general: hot and cold wallets. Even though they both have the same function, the way they work is different.

The cold wallet has one feature that is simultaneously an advantage and disadvantage - it's not connected to anything. Cold wallets can work just fine without having a connection to any network. Since the main function of the cold crypto wallet is to store your private keys, you don't need an internet connection to do that. Once you need to move your funds, you will have to connect it to any device with internet access then connect to the blockchain and sign the transaction.

The main advantage of the cold crypto wallet is the additional security that comes from the fact that it's not always connected to the internet, hence physical access to the wallet is the only way to manage funds on it.

Even though a lot of investors decide to keep their crypto funds on cold wallets it's not always the best solution out there. One of the most common problems within cold wallets users is inaccessibility to the cold wallet itself. It can always get lost, broken, or just left somewhere. That's why there is a hot wallet that works a bit differently.

The main difference between hot and cold wallets is the constant accessibility to the blockchain. By using the hot wallet you will always have the access to the funds that you own. Since, as we know, a crypto wallet only stores your private keys the hot wallet will allow you to manage your funds from different devices all over the world.

If you plan on making constant transactions from your address to another you will most likely need a hot wallet with a constant connection to the blockchain of the coin that you are willing to manage. Your best bet would be using a multi-currency wallet to receive and spend various cryptocurrencies. If you want to have simple and constant access to funds that you own - make sure to have the web version of the wallet you use.

But if you chose to use a hot cryptocurrency wallet you will need to decide just one more thing: custodial or non-custodial wallet.

The easiest way to create a wallet and start using cryptocurrencies is to use a custodial wallet. But it's not always the safest way. If you decide to create a custodial cryptocurrency wallet you will have to trust a third party with your crypto funds by giving them your private keys. The main benefit of a custodial cryptocurrency wallet is simplicity. All you need to do is find a platform that will host your wallet and create an account on their website. After that, you will receive a public key that you can use to receive funds.

If you tend to lose your passwords from websites custodial wallets might become a solution for you too. Since it's the third party that holds your funds you will always be able to reset your password without losing any of your money.

CoinsPaid wallet has all functions that you need and will allow you to manage your funds from any device that has access to the internet. To get a safe custodial crypto wallet you will need to:

• Create your account
  
• Write down your private key
  
• Use the public address that you will receive to accept crypto
  

Another way of holding your cryptocurrency is the non-custodial wallet. The main difference is that you will be the only holder of your private keys. It's a safer way to use a crypto wallet but the main drawback is the inability to recover your funds if you lose your private key.

Non-custodial crypto wallets usually come as desktop and mobile wallet apps. To get a non-custodial crypto wallet you need to:

• Create an account on the website of the wallet provider.
  
• Download a wallet app.
  
• Write down your private key in some safe place
  
• Start using your wallet

There are tons of ways to store and use cryptocurrencies. Depending on the goals that you follow you should choose the cryptocurrency wallet accordingly. But don't forget that the most important thing is the safety of your funds. Sometimes a custodial crypto wallet from a trusted company will be a much safer solution than a cold wallet that can easily get lost or stolen.
March 11, 2020