How to choose the best crypto wallets for beginners
Though it is important to protect your cryptocurrency, choosing the right wallet might be confusing to new traders. You may have known about hot wallets and cold wallets, but what is the difference between them? In this article, Tokenize Xchange will look at the pros and cons of both types of wallets and help you find out which are the best crypto wallets for beginners.
A hot wallet is the kind of crypto wallet that is connected to the Internet such as a phone app, desktop software, or an online provider. Due to the connection to the Internet, a hot wallet is much more convenient and user-friendly compared to a cold wallet. The good news is all hot wallets are free, however, they are more cyber vulnerable to security threats and cyber-attacks.
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Below are some common types of hot wallets that you may want to consider:
The exchange wallet is one of the best crypto wallets for beginners which is created and managed by a crypto exchange. Using an exchange wallet is similar to opening a bank account and depositing your money. Your crypto exchange would have the responsibility to preserve and secure your wallet.
This kind of wallet can be used for storing, transferring, and receiving digital assets. Exchange wallets are commonly used since they are free and simple to use for traders who frequently trade in one exchange.
An example of an exchange wallet is Tokenize digital wallet.
It’s like opening an account at a bank and depositing money into it. The exchange will help you preserve the cryptocurrency in that hot wallet.
Built as the browser-based cryptocurrency wallet, web wallets work either on mobile devices or desktops but do not provide users with full control as other desktop or mobile wallets.
Desktop wallets are applications running on your computer and store all your digital assets within your computer software. Desktop crypto wallets allow you to have complete control over your assets with your private keys, hence, no third party is needed to hold your cryptocurrency.
A good desktop wallet should be secured with a password and recovery mechanism to regenerate your cryptocurrency wallet in case that your computer is stolen or destroyed. There are crypto wallets for Windows, Mac, and Linux with some desktop crypto wallets supporting all versions.
Some popular desktop cryptocurrency wallets and Bitcoin wallets include:
Mobile wallets are similar to desktop wallets, except they are downloaded and installed on your mobile device. Mobile cryptocurrency wallets allow users to control their assets with private keys. Many mobile wallets support both Android and iOS.
The major advantage of the mobile crypto wallet compared to the desktop one is its portability and convenience. However, mobile wallets contain higher risks if you do not have sufficient precautions.
Some mobile wallets for cryptocurrency
- The Edge
Above are all about hot wallets, how about cold wallets? What is the difference between these two?
Unlike an app, software, or website, a cold wallet is a small encrypted portable device that allows you to download and carry all your digital assets. In other words, a cold wallet is an offline wallet used for storing and trading cryptocurrency. With hardware storage, the crypto wallet is not connected to the Internet, hence, it can protect your crypto assets from attacks, cyber hacks, and other cyber vulnerabilities.
Though highly secure, cold wallets are considered less convenient compared to hot wallets due to their transaction time, accessible funds, and cost.
Since you need to connect your wallet device to your computer, your transaction would take a longer time to be completed. Also, many hot wallets are created by large exchanges, hence, they might support more cryptocurrencies compared to cold wallets, for example, Exodus wallet can support up to 139 cryptocurrencies while Ledger Nano S currently supports 107 cryptos.
Moreover, hot wallets are usually free while cold wallets may cost you up to $300. Below are the top 5 cold wallets for storing your cryptocurrency:
- Ledger Nano X: $189
- Ledger Nano S: $99
- Trezor T: $250
- Trezor One: $78
- Keepkey: $113
What are the best crypto wallets for you?
Both hot wallets and cold wallets have pros and cons, let’s compare these two kinds of cryptocurrency wallets to find out which one is the best choice for you.
While hot wallets are commonly used for short-term trading and frequent transactions, cold wallets are mostly used for long-term investment and holding your cryptos for months or years. The good news is you don’t have to choose between a hot wallet and a cold wallet, instead, you can have them both.
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If you are a cryptocurrency trader who is owning a large and diversified portfolio of crypto assets, a combination of cold wallets and hot wallets will be the optimal option. With hot wallets, you are able to make transactions at any time, anywhere with your smartphone. Moreover, a cold wallet will help you secure your cryptocurrency and hold it for the long run.
We hope that this article helped you answer the question: What are the best crypto wallets for you? Keep following Tokenize Blog for more crypto market news and investment guide.
Cryptocurrencies are subjected to high market risk and volatility despite high growth potential. Users are strongly advised to do their research and invest at their own risk.