How To Use A Crypto Wallet 2021

Using A Crypto Wallet

Cryptocurrencies like Bitcoin are becoming more popular as they gain traction in the media. However, we understand that Bitcoin is still the most bought crypto on the market, even with its volatility, so choosing the right crypto wallet is essential.

We created this guide to help you understand crypto wallets. At CryptoParrot, our team is on hand to assist you in developing your cryptocurrency trading skills. You could be new to crypto or want to know the best Bitcoin wallets available. Either way, we have included a summary of these wallets and why you should consider them.

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What is a crypto wallet?

A cryptocurrency wallet is a device that allows you to store the private and or public keys you use to access your cryptos. The public key is shared to receive funds, while the private key should never be shared but used to sign transactions and show it is related to the public key. The wallet can also encrypt information to ensure you cannot trace personal data.

Crypto wallets don’t store your currency. They aren’t stored in a single location or exist in a physical form. Still, the records of the transactions are located on the blockchain. This system generates the relevant information to send and receive money in a decentralised way. It enables users to monitor their balance. Luckily, many online exchanges provide multi-currency digital wallets on their platform so that you can store different types of cryptocurrency in one place.

Here at CryptoParrot, we recommend you look into having your own personal wallet for added security. We also strive to develop our clients’ understanding of using crypto wallets, so our platform allows you to practice buying and selling before you start using real money on an exchange. We offer the tools needed to enhance individuals’ cryptocurrency knowledge. Whether it be finding the best Bitcoin wallets or improving your ability to trade, we can assist.

Cryptocurrency wallet types

We at CryptoParrot had a look at the different types of crypto wallets that you can use to store your cryptocurrencies online and offline. Of course, online exchanges will provide a digital wallet for you, but we also encourage you to have a private wallet for more control and security of your funds in the long term.

There are different types of cryptocurrency wallets to choose from. So it is important to know which is the best cryptocurrency wallet for you. They provide different ways to store and access your digital currency. These can be broken down into three categories, paper, hardware and software.

Within these categories, there are ‘hot’ and ‘cold’ wallets. Hot wallets run on internet-connected devices like a computer or mobile phone. Hot wallets can then generate private keys to enable you to access your funds. It is a convenient way to get a hold of your private keys, but it’s not the most secure. Software wallets are an excellent example of hot wallet storage.

On the other hand, cold wallets are not connected to the internet, so you stand at less risk of your cryptos being tampered with. An example is a paper wallet, which we think is the most secure way to store crypto offline.

Paper wallets

Paper wallets are easy to use and provide the highest level of security to store your cryptocurrency offline. They are relatively straightforward to use because you can print out public and private keys onto a piece of paper, so only you have access to the wallet. These are generally used for long term crypto investments due to the security and  privacy features.

Hardware wallets

Hardware wallets are typically used for short term storage. Many individuals opt for a hardware wallet because they are the most secure. They store the individuals’ private keys on a USB drive offline.

Software wallets

Software wallets, often referred to as hot wallets, can be used online, mobile or desktop. Using an online software wallet runs on a cloud and can be accessed from any computer location. Although it is convenient, they are more vulnerable to theft or hacks. Mobile wallets run on an app on your phone and are helpful as you can use them anywhere. Finally, desktop wallets are downloaded then installed onto your computer device. However, desktop wallets can only be accessed from the device they were downloaded onto.

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Examples of crypto wallets

Before choosing a digital wallet, you should consider what its intended use is. Will it be for everyday purchases, or are you just thinking about buying and holding onto cryptocurrencies? And if you are just holding on to crypto, will it be one currency or several? Will you then require access to your funds from home or other locations? Please take a moment to think about what your wallet may require and also look at the list we have provided with some options below.

We looked into several crypto wallets and wanted to outline some of the best we found. There are a few that specialise in Bitcoin, so we included a Bitcoin wallet review as well as other storage devices.

Exodus

Exodus is known to be easy to use and an excellent start for beginners. It has a simple user interface and a built-in exchange that allows you to trade efficiently. At the same time, your Bitcoin or other cryptocurrency address is still protected. It is a hot wallet because it uses an internet connection, but there are over 100 cryptos to choose from. Exodus also has an incredible customer service team that can give you advice if you need it. However, it does use closed source software which can cause security concerns.

Electrum

The Electrum wallet is one of the best for Bitcoin transactions. It has been securing Bitcoin payments since 2011, so it has a decade of experience and reliability. It is arguably one of the best Bitcoin wallets because of its longevity and simple interface. Its focus is purely on Bitcoin, but it would be best suited for more advanced traders because it does have a lot of information that is quite complex.

You can choose the level of security you want for your wallet, and it even includes two-factor authentication and multi-signature wallets. You can also set custom transaction fees and have the option to store your Bitcoin in cold storage. There is no customer support, however, so beginners should look for alternatives.

Mycelium

Like Electrum, Mycelium only supports Bitcoin. It is a hot wallet but only operates on a mobile device. It is a positive because we all use our phones. Some more than computers or laptops, so having that mobile-friendly interface is quite helpful. Mycelium does have a built-in exchange, similar to Coinbase or Binance, so you can efficiently move your cryptos around and trade when you want to.

It is one of the earliest Bitcoin wallets, initially starting in 2008. Like Electrum, you can also set custom transaction fees that help you determine how long you’ll end up waiting for the transition to finish. In addition, Mycelium has hardware wallet support. It allows you to keep your Bitcoin holdings in an offline storage device like a USB and monitor that in the user interface.

Ledger Nano X

We highly recommend this wallet to keep your crypto safe. The French company Ledger developed the Ledger Nano S as the first hardware wallet and then the Nano X to follow. Because this is a hardware wallet, which looks like a USB drive, you can plug it into your computer and connect it to Bluetooth if you want to use a mobile device.

It currently supports over 1500 cryptocurrencies as they continue to grow. Ledger Nano X comes with Ledger Live software that has a convenient user interface. You can manage and add new wallets for different cryptos, but the Bluetooth is known not to be as smooth as it could be.

Risks

As with all styles of trading, there will be some risks involved. With the crypto market being relatively new, we thought it would be an ideal time to look at the most common threats when choosing the best crypto wallet for you. In addition, each digital wallet is designed differently, so it’s good to think about their response to threats and security breaches.

Anonymity

Crypto wallets are not entirely anonymous. They aren’t tied to the identity of the individual. However, the transactions are stored publicly and permanently on the blockchain system. So although your name and address won’t be there, the wallet address can potentially be traced.

Hot wallets connected to computer devices

A lot of trust is needed when you do use online exchanges. For example, the platform you use may suffer a hack. Since your funds are using an internet connection, you may lose capital. In addition, it would come at a high cost to the company if the online exchange did not protect the user’s data as well.

Bad habits

Users who use or reuse easy-to-guess passwords or click on links without knowing what they’re clicking onto. Or failing to perform updates to better enhance the platform they’re using all contribute to potentially having malware or fake apps and login pages coming to steal data.

Conclusion

It is essential to think about the right crypto wallet for you if you are trading cryptocurrency. We at CryptoParrot understand that you want to find a wallet that suits your trading needs and intentions. Understanding cryptocurrencies does take time. But, with our advanced trading simulator and expert guidance, you will develop your skills before having to use real money on an online exchange.

We want you to know the benefits and the risks of certain crypto wallets or even specifically Bitcoin wallets. Whether they are hot or cold storage, the security of your data and funds should be a priority for whichever wallet you choose.

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Best Bitcoin wallets FAQ

❓What is the best Bitcoin wallet?

There are several Bitcoin wallets to choose from online. It is important to find the one that best suits you and your crypto needs. You should consider if you want a wallet that only works when connected to an internet connection or if you want a wallet that is solely offline, like on a hard drive or paper. Some wallets offer both on and offline options, so it’s ideal to look around and learn how to buy Bitcoin. In addition, we included a Bitcoin wallet review where we weigh in top Bitcoin wallet options.

🌐Do I need a crypto wallet?

If you’re new to cryptocurrency or if you’re an experienced trader, you’ll come to know that online crypto trading and exchange platforms offer in-site crypto wallets. In addition, most online exchanges allow you to store more than one cryptocurrency in their digital wallets. In contrast, others are solely used for one crypto, like Bitcoin. We recommend you look into a personal wallet that isn’t connected to the exchange for added security, so you have more control over your funds. You will also have the option to monitor your cryptos at any time. 

🔒Are crypto wallets anonymous?

The best crypto wallets work on a blockchain system, meaning they don’t store your cryptos in a physical form or exist in one location. But instead, the record of the transaction is maintained across several computers linked in a p2p or peer to peer network. This system generates the relevant information to send and receive money in a decentralised way, without your personal details being shown when investing in Bitcoin.

💸How much does a crypto wallet cost?

There are different types of crypto wallets to choose from. These include paper wallets, hardware wallets, and software wallets. Depending on what you want to use will decide the cost. We looked at the best Bitcoin wallets and found that some are online and supported by an internet connection. At the same time, other wallets are hardware and are offline and have higher levels of security. All these factors come into play when deciding the cost of a digital wallet. 

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