Digital currencies come with numerous factors worth considering before you really start to do business with them. While you have decided that bitcoin will probably be your first investment and know that you should open a free account on a cryptocurrency exchange platform, you also have to know about storing your balance. Putting aside the cash necessary for your initial investment is the first money decision you have to make. The second one is to know how and where you should keep your digital currencies as they grow over time. There are several places and ways of doing so, all of which are known as wallets.
Crypto wallets exist to keep your balance safe and sound and they do it in a few different ways. In this article we talk about the most important reasons to use the wallets as well as what the best types are. If you are looking to get in the cryptocurrency game soon, this is some of the most crucial knowledge you should be equipped with. To find out more on the matter, make sure to check out justtechtips.com.
What are They?
Cryptocurrency wallets, electronic wallets, or ewallets are the go-to way of storing one’s digital currency balance. No matter how much you have and how many different virtual currencies make up your portfolio, you keep them in a single wallet. Each wallet has its own address and password. Of course, you should never share your password with anyone. When it comes to the address, it is a string of seemingly random numbers and letters. This is your special key that you will be sharing with your business partners.
No matter if you are selling, buying, or trading, the other side will need your address in order to complete the transaction. Best of all, this is all they need unlike other forms of modern-day payments that ask for your name, address, phone number, and complete credit card info. Since the wallets themselves have all you need in order to do business, they are an invaluable tool in all of your digital currency work and you can hardly do without them.
Moving funds through the blockchain networks of currencies is a key process you will be a part of. Moreover, you can clearly view your balance and other account details since the wallet is basically a software, at least if it is the online variety but more on that in a bit. The security and speed of the wallets depend on many different things including the company/organization that allows the services, as well as the type of wallet.
There are three different cryptocurrency wallet types in existence, each with slight variations and specific uses you may find more suitable to your needs. These include software, hardware, and paper wallets.
Software ewallets can be desktop, mobile, and online. As their names suggest, they are either based on your computer, mobile device, or as an online service. You can only access the desktop model on the platform where you download it and this increases security and privacy. Mobile ones are practically apps you have to download and install. They have smaller storages but are quite useful in shopping and on the go. Lastly, online-based wallets are like cloud services that you can access as long as you have internet connection on any device. All of these are somewhat susceptible to hacking and viruses, just like other software, especially on public networks.
Since you know the difference between software and hardware, you can easily guess that the second type of wallet is a physical drive like a USB flash or an external hard or solid state drive. For additional privacy and security, it is best to keep cryptos offline, hence the need for this version of wallets. Storing is their main purpose and not transactions. They are hardest to hack and the most expensive solution, but a necessary one. Just make sure not to lose it or have it stolen!
Last but not least, we have special software that generate keys and print them for you on regular paper. Specific modern software solutions can do much more than this, but this would be their core use. These are used to increase security the old-fashioned way with a modern twist of scanning codes or entering keys.
Reasons to Use Wallets
Finally, we must deal with the main topic of the article, which would be the reasons you should use cryptocurrency wallets to store your bitcoin.
1. You Kind of Have to
Basically, you will not be doing a good job without having a wallet. There is no crypto work without a means to safely, securely, and privately keep the balance hidden at all times. If you keep it any other way, which is very rare nowadays, your business will suffer. The whole concept is made to be better and optimal with a wallet, so do not hesitate to use it from the start.
2. Security and Privacy
As you now know, these wallets are basically made to be private and secure since nobody actually knows who is behind them. As you only give the other side the address, and only you can approve the transaction with the key, they do not even know your name or where in the world you are. This is one of the best sides of cryptocurrencies and the reason they are increasingly popular. Lastly, the transaction cannot really be hacked into or stopped once it has been initiated. No third parties, near-complete anonymity, and increased security. What more do you need in business?
3. Ease of Use and Access
From what you have seen above, there are multiple ways to store the balance you have and access it whenever you require it. What is more, nobody says that you can or should use only one of them. The best in the game use all three models for increased security and an easier way of accessing and viewing their portfolio. If you combine software, hardware, and paper wallets, and for example have a desktop, mobile, and external hard drive in your rotation, you will be able to do business no matter where you are and what you need. Top that with an occasional paper printed key and you will be as protected as possible.