Let's say, for the sake of argument, you've read up on the digital currency industry, and you've decided that a plunge into investment is right for you. Congratulations! The next thing you'll want to consider is where you're going to keep all those shiny electronic coins. There are several ways you can store and maintain your cryptocurrency accounts; aptly enough, the programs designed to help you do that are called wallets. As a matter of fact, it's very difficult to have a cryptocurrency account without a wallet associated with it.
The regular wallet you carry—besides being a place to keep family pictures, ticket stubs and whatever else may collect there—is a storage place for your financial tools. Most people keep their bank cards, credit cards and regular bill-and-coin currency in their wallets. Well, a cryptocurrency wallet isn't all that different. They're made to store all the information that's pertinent to your digital currency account, and they come in four different types:
- Software Wallets. These are programs—ranging from bare-bones simplicity to very large and complex applications—that are installed on a desktop or laptop computer for account access and maintenance. Since space is less of an issue than it is with mobile wallets (please see below), software wallets sometimes come with added features such as market graphs and mining software, as well.
- Mobile Wallets. These are smartphone and tablet-friendly apps you can take with you anywhere. These are ideal for investors who like to make purchases on the go. Due to space limitations that are inherent with mobile devices, these tend to be smaller and simpler programs than software wallets.
- Web Wallets. Currency exchanges issue this type of wallet, which runs on cloud computing—that means they can be accessed from any computing device, anywhere. Web wallets can come with a trade-off: they're more simple to access, but the online availability of digital currency information can lead to hacking and theft.
- Paper Wallets. The codes for your currency can be printed out, and these hard copies can be stored in a regular wallet, just like traditional bill-and-coin currency. These are ideal for traders who intend to invest most of their cryptocurrency, and not use it as much for purchases. Paper wallets—properly stored under lock and key, of course—also give investors a very high level of security in comparison to their digital cousins.
There are also what are known as “hybrid” wallets, which combine the local storage capabilities of software wallets with the universal accessibility of web wallets. Most people in the digital currency field consider these to be enhanced software wallets, since they involve the installation of a program on a computing device—and thus most hybrid wallets are categorized as such.
In this section, we'll take a closer look not only at the types of wallets there are available to investors, but we'll also share advice about what you should keep in mind when you're shopping around for a wallet. For example, many types of currency—and also many exchanges—offer their preferred wallets upon sign-up or initial investment. Only in rare cases are you required to go with the wallet offered in these cases; most of the time, you're free to shop around elsewhere to find one that more closely fits your specific needs.
With that in mind, we'll give an overview of the features being offered in the more popular wallets out there. Whether you just want storage for your account, or all the bells and whistles, there's a wallet out there just right for you. Many wallet features deal with security, so we'll also pass along some tips to consider when it comes to keeping your cryptocurrency investment safe. As you'll see, hacked wallets can mean a total loss, so security is critical for your investment. Finally, we'll touch upon one of the most often-asked questions about mobile wallets: why doesn't Apple offer any?
There's a broad range of choices investors have in the storage and maintenance of their digital currency accounts. As an aid, we're devoting this section not only to the concept of the cryptocurrency wallet, but what traders should look for in order to find one in line with their purchasing and investing plans. For all intents and purposes, your wallet is your alternative currency account; for the later to function in any meaningful way, it needs the former. This section, therefore, is here to help you make that all-important wallet selection.
Next Wallets Topic: First-Party Wallets