What Should I Look for in a Digital Currency Wallet?

In Wallets

The second you invest in digital currency, you're gonna want a wallet to maintain your account, and to make and track your transactions. Wherever you purchase your cryptocurrency—directly from the issuer or through an exchange—chances are they'll recommend a certain wallet to you. You're under no obligation to go with that particular wallet, of course—but industry experts recommend you have a wallet in mind before you make your initial investment. In this article, we're gonna walk you through what to look for in order to choose the wallet that's right for you.

Wallet Type. There are four types of cryptocurrency wallets:

1. Software Wallet: These are downloaded onto, and stored on, your home computer or desktop. Since PCs and laptops have more storage space than mobile devices, these are larger and more elaborate programs. Transactions can be made online, but on-the-go capability is usually limited.

2. Mobile Wallet: These are apps for your smartphone or tablet computer, and they tend to be more streamlined than software wallets. However, one feature they have over software wallets is mobile transaction capabilities such as QR code scanning and phone-to-phone transfers. A mobile wallet is a must if you plan on using digital currency for transactions away from home.

3. Web Wallet: These are stored online via cloud computing, on third-party servers, and are usually offered by digital currency exchanges. Web wallets can be accessed by any computing device through a web browser.

4. Paper Wallet: Very much like a wallet designed for traditional currency. You print out cryptocurrency, and these hard copies can be used in transactions. Paper wallets are usually used in tandem with one of the other types listed above.

Don't feel you need to fence yourself into having just one type of digital wallet. For example, many investors have both an “at-home” wallet and one on their mobile phone. Any or all of the types listed above could come in handy—though maintaining all four kinds at once can be extra work.

Features. What functions do you want your wallet to perform? Just as important, what extra features do you not really need? If you're strictly an investor, and have no intention of making purchases, you probably won't need features such as QR code scanning and phone-to-phone transfers; however, you will want real-time market value updates and currency performance graphs. If space is an issue—such as on a mobile device—you'll want to look for a reputable wallet that doesn't have a lot of bells and whistles.

Security. When you sign up for digital currency, you'll be issued public and private keys which assure your transactions are encrypted and secure. You'll also want to take a look at the measures taken to protect your currency. For example, if it's a wallet you'll be maintaining, does it have offline capability? Your currency really should be offline unless it's in direct use; that helps keep hackers at bay. If you're using an exchange, ask them how your account will be protected. Cryptocurrency doesn't have identifiers that link it to any one person, so once your coins are gone, they're gone; this makes security all the more important.

Updates. These can contain everything from new features to improved security to glitch fixes. Mobile and web wallet updates are usually automatic—but double-check when shopping around. Software wallets often prompt you when an update is available, but this isn't always the case; you may need to give yourself reminders to check for updates periodically. An out-of-date wallet may not perform properly, and its security could be compromised.

Operating System. At the time of this writing, the clear victor here on the mobile front is Android. Apple has stringent restrictions when it comes to apps that involve third-party payment options, and as a result there are almost no fully-functional mobile wallets for iOS. There are a few BlackBerry wallet apps available, but Android has the market cornered here. For desktop and laptop operating systems, your options are much better; there are versions of wallets for every major OS out there.

Wallets are just one consideration to ponder when you invest in digital currency. For all the most current information on this fluid and growing field, turn to Coin Pursuit as your greatest resource. We're always open to feedback and suggestions to help keep our site the best source for all cryptocurrency topics.

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