What is a crypto wallet?
A crypto wallet is the first thing you’ll need when you jump into the crypto universe. Just like there are limits to what you can do in the real world without a wallet, there are enormous limitations to this digital world without a crypto wallet. As such, it is very similar to the wallet in your pocket, just the digital version.
It is your connection to a blockchain, such as Ethereum or Solana, which allows for anything from sending and receiving money, to transferring and even storing digital goods. This can be done directly through something like MetaMask or on a marketplace.
The wallet also contains your public and private keys. The public key is how others know where to send funds or how they know you are the one sending funds to them. A private key is for only you to know, and it must be kept safe. Another way to think of it is with this proportion:
user name : password :: public key : private key
The two types of crypto wallets are hot wallets and cold wallets.
A hot wallet is always directly connected to the internet. That means, it is less safe between the two types, but it is more convenient, as it is always accessible. An apt comparison is between:
- your important pictures and files being stored in the cloud (access files from anywhere, more prone to security breaches)
- your important pictures and files being stored on a USB stick locked inside a safe in your house (files have limited accessibility, minimal security risk)
If you hadn’t yet guessed, the top bullet point is the hot wallet, the bottom – cold.
Hot wallets are readily available on many devices including phone apps, desktop apps, crypto exchanges, and browser extensions.
While definitely not the safest, a phone app is undoubtedly one of the most convenient ways to access and transfer funds and goods. These can be found aplenty in the Google Play Store and App Store. Some of the best are:
- Bitcoin Wallet [Android]
- Edge Wallet [iOS | Android]
- Breadwallet [iOS | Android]
- Bither [iOS | Android]
- Coinomi [iOS | Android]
Desktop Apps / Crypto Exchanges / Browser Extensions
These wallets arguably have the largest pool of opportunity for use. These are what you’ll need if you want to transfer money to and from an exchange or art curator, all of which are growing exponentially in number.
A wallet on an exchange can be incredibly simple, since you set one up on an exchange, and you can move crypto throughout the exchange for little to no waiting or fees.
By far the most popular is MetaMask, and a few more can be found here:
- MetaMask [Chrome | Firefox | Brave]
- Exodus [Windows | Mac]
- Coinbase Wallet [Chrome}
- Electrum [Windows | Mac]
- Trust Wallet [Windows | Mac]
Whew, so that was the tip of the iceberg with hot wallets. There are far fewer options in cold wallet storage, mostly due to the fact that they really just do one thing, and they do that one thing extremely well.
Cold wallets, or alternatively offline wallets, are never connected to the Internet in order to use them. Again, they are less convenient than a hot wallet but far more secure. Due to this security aspect, a cold wallet is extremely safe and recommended for longer-term storage of larger amounts of crypto.
The idea of a cold wallet is to turn a USB stick into a digital fortress. Whereas hot wallets show you your key phrase in plain text while online, you should only access your cold wallet key phrase one time, while offline, and outside of emergencies, never need to access it again. You can learn a ton of information by just browsing some of the best crypto subreddits or hear directly from the CEO (Chief Experience Officer) of Ledger here.
Once you have your key phrase safe and secure offline, you connect your cold wallet to MetaMask, or the like, to send and receive crypto, just like a hot wallet. Although, in the cold wallet scenario, you’d have to press a physical button on the wallet in order to make the transaction.
Some of the best and most popular are:
Both hot and cold wallets have their upsides and downsides, but there are definitely places in this wide world of crypto for both. If you’re looking for maximum, long-term security with large amounts of crypto, a cold wallet is by far the safer bet, especially for one of these NFTs.
However, if you’re just “kicking the tires” in crypto with small amounts of funds, a hot wallet is quicker, simpler, and more convenient.
The catchall scenario would be to implement a combination of the two, depending on your risk threshold.