Have you ever heard of the term Cryptocurrency or Bitcoin? And lack of its knowledge made you feel left out in the group discussion?
Well, I can assure you there’s no more reason to feel that way, as this article will make these terms floating about in the cryptocurrency platforms easier for you to grasp.
What Exactly Is Cryptocurrency, And How Can We Invest In It?
Crypto means ‘private’, and currency meaning ‘ medium to exchange.’ The name itself denotes it as a private currency. Not only private but also the fact that it is a digital currency makes it a more future-oriented investment plan. There are several digital coins under cryptocurrency, such as –
- Bitcoin
- Ethereum
- Tether etc.
These three have been on the best crypto to buy now list for a while. Anyone can buy these with the help of a crypto exchange, a platform where buyers and sellers meet to trade cryptocurrencies. Some of the well-known crypto exchanges are Coinbase, Gemini, and Binance.
An alternate way to buy cryptocurrency is through a broker. The brokers offer easy-to-use interfaces that interact with exchanges for you. Robinhood and SoFi are among the most well-known crypto brokers today.
Just as in real life, after buying something, we also require a place to store it. In the same way, we have Digital Wallets, also known as Crypto Wallets, to store our cryptocurrencies.
These can also be called safe wallets to store our crypto coins. But this is not their sole function, as when we make our account, we are also given access of –
Private keys – The passwords that give access to your cryptocurrencies, which makes it safer and allows you to send and receive cryptocurrencies and
Public keys – These allow individuals to send you emails, but the email address would not allow anyone to access your email.
Types of Crypto Wallets
Hot Wallets
- Paper wallets
It is one of the top cryptocurrency wallets. In paper wallets, the keys are usually written on a physical source like paper and stored safely. But this might lead to a constraint as digital money can only be used on the internet.
- Hardware wallets
In hardware wallets, the keys are stored in a thumb-drive device that is kept in a safe place and only connected to a computer when one wants to access it.
Cold Wallets
- Online wallets
Unlike paper wallets, these are stored digitally on software. This makes sending and receiving cryptocurrencies much easier than paper wallets.
How Do We Pick The Right Wallet For Us?
From this, we can conclude that hardware and paper wallets are harder for malicious users to access because they are stored offline and at risk of being destroyed or lost.
Online wallets such as Coinbase can be the simplest way to get started for a beginner, as it offers easy access.
Why The Coinbase Wallet?
As the Coinbase wallet gives us easy access to our crypto holdings, we can control all our private keys, browse apps (decentralized finance apps), shop at stores, and send and receive cryptocurrency from anywhere in the world.
As each wallet has different strengths, there are trade-offs, so it is a difficult measure.
If you are one of those who make regular, quick online payments, Hot Wallets would be best for you. On the other hand, if you intend to hold your coins for a longer time and want to keep them safer, then Cold Wallets would suit you best.
Also, certain factors such as software vs. hardware, fees, how user-friendly it is, supported coins, platform compatibility, security features, and whether the wallet has backup options, etc. are some factors one should consider while choosing a crypto wallet.
Conclusion
Each of us has different requirements and capacities to trade online, so the selection for our wallets may also differ between hot and cold wallets.
Also, following somebody else’s choice without considering our requirements may give us a hard time going ahead and doing well.
Remember that these digital wallets are more secure than any physical wallet as they are less likely to be robbed or lost. In matters of privacy, it does not have any regulating body, nor can anyone peep into our accounts, as each of us will have a specific and secure address to access our wallet.
But as any good thing has bad effects, we must be very careful about our choice of Digital wallets and ensure we keep our coins in a safe wallet.