Cryptocurrencies are among the most popular assets for investors. Despite recording a steep decrease in price over 2022, especially compared to 2020 and 2021 levels when the prices reached record-high levels, investors remain optimistic that the situation is likely to improve over the course of the upcoming year. And while researchers and financial analysts maintain their reservations about when precisely the economic crisis is going to improve, this hasn’t deterred traders from keeping up to speed with their undertakings. Many saw themselves compelled to change their strategy and align it to the new requirements of the ongoing crypto winter in order to secure their assets as much as possible.
However, trading crypto remains a complex venture, and there’s no shortage of people who believe that crypto is fundamentally an unsafe holding. This is partly due to the frequent fluctuations that affect crypto prices, making them an unlikely asset to own when you wish to acquire value in the eyes of many investors. However, it is also due to the fact that crypto is susceptible to hacking. Cybercriminals consider digital money storage devices and software highly desirable due to the ease with which they can be cracked. Moreover, given the fact that any action taken on the blockchain cannot be modified or altered in any way following completion, there’s no reason to worry that their activities will leave a trace that could point back to them. This way, the theft becomes essentially impossible to punish.
So, does that mean that you should put all your crypto plans on hold or abandon them altogether? The simple answer is no. The more extended one is that there are several ways you can ensure your crypto is safe by protecting your digital wallet accordingly. But how do you choose the right wallet, and how can you know what are the characteristics you should look for when choosing one?
Types of wallets
Before deciding on one type of wallet, you must be aware of the options available. All the other options come with additional features, and all of them have advantages and disadvantages. Your choice depends largely on your particular requirements and the expectations you have from your investing career.
Based on ownership, wallets can be either custodial or noncustodial. In the case of the former, a third party hosts the wallet you sign up for and holds your crypto on your behalf. This is a perfect option if you don’t want to have to worry too much about setting up your wallet on your own. If you’re apprehensive about the setup process and don’t feel confident doing it yourself, entrusting your coins to a third party for management is the ideal solution. There’s also the added bonus that you don’t have to worry about losing all your crypto in the event you lose either your wallet or your private key. Nevertheless, for some investors, a custodial wallet is an unappealing solution as it makes them feel like they don’t have exclusive ownership over their own finances.
In the case of noncustodial wallets, you don’t have to worry about any third-party management. If you’re very particular about having exclusive access to your crypto, this ought to be your preferred solution. With a noncustodial wallet, you’ve got exclusive access to your digital money. However, exclusivity also puts more responsibility on your shoulders, as you’re the only one in control of your currency. This type of wallet offers additional advantages when it comes to the transactions you can perform. While buying, selling, as well as receiving or sending crypto can be performed from all wallets, the noncustodial ones allow you to borrow, lens, and stake your assets as well. This makes them the preferred solution for traders who want to branch out their ventures.
A further category splits crypto wallets into those providing hot and cold storage. The first one is online and software-based, while the second is more similar to an external hard drive or a USB stick. Cold storage is an offline option, which makes it safer. Although it doesn’t completely eliminate the risk of cyberattacks because you could connect your wallet to an infected computer and therefore leave your crypto potentially vulnerable, it reduces it significantly. Moreover, it is the better option if you plan to trade professionally and expect you’ll need to store a substantial amount of crypto.
The right type for you
When you’re looking how to buy Ethereum, the most popular altcoin in the world, you’ll look for a suitable exchange as well as the price variations of ETH to get an idea of the best time to place your trade. To buy Ethereum, you need to be aware of the fluctuations, so you can arrange a successful “buy low, sell high” strategy for your ventures.
There’s no definitive way to determine which wallet would be best for you. You need to decide this on your own, depending on your needs. If you intend to trade frequently and keep your transaction in the relatively low ranges, an online-based wallet will work just fine. However, if you plan to store a large amount of crypto and want to be sure your assets are well-protected, you may want to choose a cold storage option. It’s also the best option if you don’t require immediate access to your crypto regardless of where you are and if you place high value on privacy and security.
The key features
The key characteristics you should look for in a wallet you purchase include security, user-friendliness in regard to the interface model, currency support options, the reputation of the wallet providers, and portability. Because crypto is vulnerable to attacks, you want to make safety a central consideration of your choice. If you’re going to get extra security measures in place, pick a wallet that supports two-factor authentication.
The crypto wallet you choose is crucial for your trading career. You want to pick something that can support all your trading ventures and keep all your cyber coins safe and sound.
