People often ask experts for the key factors to consider when choosing a cryptocurrency wallet. People are scared of losing their coins or tokens to malicious people who will not hesitate to sweep the wallets clean if they get a chance.
If you are new to the crypto world, then you need to open a wallet, and a safe and functional wallet for that matter. But before that, it is crucial to know the factors to consider. Usually, these are the key terms used in the industry.
To manage the cryptocurrency of an individual or business, you need a wallet. It is assigned an address and a private key, which we are going to look at next. This can be considered as a single bank account and a person can have more than one. Wallets are sensitive and handling them carelessly can cost you a lot of crypto resources.
Banks provide users with account numbers while cryptocurrencies use a wallet address as the unique identifier that people will use when sending cryptocurrencies to you. When sending some to other people, you will also ask for their wallet address.
Wallet Private Key
The private key is what stops anyone from accessing your wallet. It is equivalent to the key for a safe or house. Thus, it should be kept private and confidential by the owner of the wallet. It is used every time a person does transactions and performs other functions with the wallet.
Types of Wallets
If you visit the Nakit coins website, you will be surprised to know that there are many types of wallets that you may consider. Each has its pros and cons. Thus, choose one that suits you well.
- Hardware wallets – Some private keys are permanently stored on a device like a computer. To make them safe, embedded software is used. These wallets are primarily non-custodial, which means that an individual manages it and takes all the possible risks.
- Desktop and mobile wallets – As the name suggests, the private keys of these wallets are stored on desktops and mobile devices respectively. Each of them can be non-custodial, where the owners manage them, or custodial, where a 3rd party manages them for you. In the latter case, hot storage is used and the private key is connected to the internet.
- Web wallets – These wallets are becoming popular these days. They can be accessed from anywhere and any device. The private key is stored on the web through a webpage or an extension on a browser. The primary challenges they face include hacking and malware attacks. However, some security tips and solutions from experts will let you enjoy their flexible services without anything to worry about.
- Paper wallet – These are less frequently used. The key and address details are printed on a paper or card to be used with other software. Losing the details means losing the cryptocurrency.
This might sound like a lot for a beginner, but all of these concepts should be used if you want to succeed in the cryptocurrency environment. After all, everyone was new just like you at one point. After reading this, you are now ready to start off with a wallet.