Studies have revealed that the number of crypto wallets are increasing by the day. For instance, between 2016 and 2019, it was discovered that blockchain wallets were used by more than 40million people from various countries around the world. According to experts, there has been an exponential increase from the number (below 8million users) it was before this period.
At the moment, this number doesn’t seem to be slowing down as it keeps on increasing. Just as digital assets continue to experience rise in their prices; that is how the number of crypto wallet users/owners will be increasing.
It is important to note that the process of owning one is not straightforward. In other words, choosing a crypto wallet demands that you are very vigilant. This post will be explaining everything you need to know about cryptocurrency wallets. At the end, you will definitely understand the factors to be taken into consideration when trying to choose the best.
What is a crypto wallet?
Cryptocurrency wallets are platforms or means through which people can receive and store digital assets. They are applications which have been built to help users store different types of cryptocurrencies like Bitcoin, Ethereum, Litecoin, Bitcoin Cash, Ripple and many others.
Here is how it works
If you acquire Bitcoins, such will have to be stored in your cryptocurrency wallet. It is from such a wallet that you can carry out various transactions. The same way other applications are designed to run on PCs and smartphones, that is how cryptocurrency wallets function. One of the most unique aspects about them is that they can hold up various cryptocurrencies
In order to facilitate exchange of cryptocurrencies from one person to another, parties are expected to have their own wallets. For instance, John owns a crypto wallet and would like to send some bitcoins (or other cryptocurrencies) to Michael. At this point, Michael is expected to own his own cryptocurrency wallet. He sends a special address to John which has been generated from his own account/wallet. This address can be generated anytime Michael wants to receive Bitcoins from another wallet.
Tips for choosing the best cryptocurrency wallet
Having known what is a cryptocurrency wallet and how it has been designed to work, there is no doubt that you must be considering opening one right now. The truth is that not all crypto wallets are worth your time. As a matter of fact, some will cause more harm than good. There is no need to be worried though as this post will be revealing some crucial factors and variables to watch out for while trying to choose a crypto wallet.
Reputation of the company
This is one of those factors that most people usually ignore and end up getting screwed. If you don’t want to lose your hard-earned money, ensure to carry out proper research about the company you plan opening crypto wallet with. For instance, there are companies which have had legal issues in the past for not being able to store data properly. This problem can bring about hacking and loss of money.
Ensure you are dealing with a company that has been in the business of protecting and safeguarding cryptocurrencies for long. Simply put, its reputation and goodwill must be intact. Also, find out how the company is being managed and whether they are insured. Any company that doesn’t tick all of these boxes should be ignored.
This is another factor that you should never ignore when trying to choose a crypto wallet. Most companies are quick to talk about being the best. However, they usually fall short when it comes to using modern and highly sophisticated technologies in place. Everyone knows that hackers are waxing stronger despite government policies to checkmate their criminal activities. This is why you need a company with all the latest and most effective security measures in place.
There are crypto wallets which allow users to go through 2-step verification processes before accessing their accounts. It is also important to understand the means through which your private key will be stored. For instance, some companies allow users to hold their keys while others store such on their server. Holding it on your own is much better. The bottom line is to choose a wallet with modern technology that can protect your account against hackers.
Transparency is very crucial if you want to operate a cryptocurrency wallet successfully. In this case, you need to find out whether there are any hidden details. Owning wallets that operates based on open source codes is better since you can know how your cryptocurrencies are being secured. In the same vein, it is also important that there is regular update of such open source code. This will protect your account from any form of vulnerability.
It is something you should pay attention to since many people have fallen victims due to vulnerable accounts. When the code is updated on a regular basis, your account will have maximum protection.
Availability of backup features
It is good to know that most companies operating crypto wallets are beginning to make this feature available. Have you ever lost all of your data due to hardware breakdown? It means that your chosen wallet has all of such data backed up. With these features in place, you can get back your password, username, and every other important information to access such an account without hassle.
As simple as this may sound, there are people who have lost millions due to poor backup features in place from their chosen companies. Most companies will even go a step further to help you generate log in details. So long as you can remember the username and password for your email address, such log in details can be used at any given time without restriction.
There is something about owning and operating a cryptocurrency wallet which most people are yet to understand. This is the fact that something will always go wrong. In other words, it is only natural that you would feel stranded at some point. It is the reason why you need to deal with a company that has a very effective customer support system in place. This makes you feel secured that your money is safe.
There are times when the cryptocurrency server may be experiencing some issues that need to be fixed. In such cases, you may deposit some amount only to log into your account and find out that it is showing zero balance. Without proper customer support to explain what might have happened, you can start raising false alarms. Also, the highly volatile nature of cryptocurrencies requires some explanations especially when you have zero knowledge about how the market operates.
Flexibility in terms of operations
Avoid crypto wallets that are too rigid in their operations. These can limit you in many ways since you may find it hard experiencing all the benefits that cryptocurrency investments have to offer. Flexibility here means whether you are being allowed to store various cryptocurrencies in such wallets or not. Modern companies that are coming up give their wallet users the chance of storing various cryptocurrencies like Bitcoin, Bitcoin Cash, Ripple, Ethereum, Litecoin and many others.
With such flexibility, you will not have to bother about signing up with other companies. The bottom line here is to always choose a wallet that is robust and accepts multiple cryptocurrencies. Don’t just sign up with any company without knowing whether it supports multiple cryptocurrencies or not. You never can tell what will come up in the nearest future and you may have to use other cryptocurrencies.
Does your favorite crypto wallet allow conversion from one cryptocurrency to another? There are lots of companies out there that don’t support such a feature. This can cost you more money in the long run since you will have to start doing transfer from one wallet to another. Still don’t understand? Here is a simple explanation of cryptocurrency conversion. You have Bitcoins in a wallet and would like to convert them into Ethereum or Bitcoin Cash.
If your preferred wallet doesn’t support such a transaction, it means you will need to have the Bitcoins transferred to another platform for the conversion to be carried out. This will cost you more. Another thing to consider in this regard is the ease at which such conversion can take place. Of course, it is one thing to allow the conversion of one currency into another and something entirely different for such a process to be very fast. You should consider these factors to save yourself the stress of looking for another platfrom sooner or later.
Having seen the above, it is obvious that there are lots of factors to consider when it comes to choosing the best cryptocurrency wallet. Ignoring any of these can come back to haunt you later on which won’t be good. Before signing up with any company’s crypto wallet, ensure it ticks all the boxes with regards to the variables listed above.