In recent years, the financial sector has been abuzz with discussions and debates about Bitcoin. Ever since its record-breaking highs of 2017 and subsequent decline, financiers around the world have debated its worth as an investment.
Nevertheless, several people continue to invest in Bitcoin and buy bitcoins to use in transactions. However, once you buy bitcoins, you must have a place to store them. You don’t want digital assets floating around unprotected, after all!
To store your bitcoins and other cryptocurrencies, you need a crypto wallet. These tools are essential for anybody interested in managing cryptocurrency.
However, many crypto wallets exist online. As such, in this guide, we’ll explore how to choose the right digital wallet and set it up!
How Does a Crypto Wallet Function?
Before you choose a crypto wallet, it’s best to explain how they function. A cryptocurrency wallet acts as a traditional wallet but contains proof of your digital assets instead of paper currency.
It stores the keys required for purchasing bitcoins and other cryptocurrencies. Moreover, it provides digital signatures that authorize your trades and transactions.
Types of Digital Wallets
When choosing between cryptocurrency wallets, you have two categories from which to decide. These categories are hot storage and cold storage wallets.
A hot storage wallet connects directly to the Internet. Often, this connection comes through a phone app or desktop software program.
Hot wallets bring several benefits. First, most hot wallet connections are free to use. Second, they allow for ease of access, as they remain constantly connected to the Internet.
However, this constant access to Internet has a downside: These tools are more susceptible to hacking and security breaches.
A cold wallet, however, is an encrypted portable device. These wallets allow you to download your bitcoins and other cryptocurrencies offline. These devices also store your assets offline, making them much more secure.
These devices usually cost between $50 and $200. They function like flash drives, allowing you to download your digital assets and carry them in your pocket.
How to Set Up Crypto Wallets
Most people who trade in crypto utilize another option called a hosted wallet. These wallets function similarly to hot wallets in that they use the Internet to store your assets.
However, hosted wallets function like a bank. They are a third party that keeps your assets and grant you access through your account.
Setting up a hosted wallet account is a straightforward task. First, choose a platform you trust, such as Coinbase or ByteFederal. Then, create your account.
Creating an account usually involves giving the host some personal information. Of course, you must also create a secure password. You may also want to use 2-step verification processes to increase security.
Find Your Crypto Wallet Today
When you decide on a crypto wallet, always bear in mind your crypto goals. If you have a copious amount of crypto assets, it may be wisest to mix host wallets and cold wallets. To start, however, most crypto traders would recommend finding a hosted wallet.
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