When it comes to the world of cryptocurrency, there’s a lot to learn. There’s a lot to unpack when it comes to crypto, but once you start understanding the different elements and angles, the different technology, its capabilities, and its flexibility, you’ll start to see how exciting crypto can be.
While people have been mining, investing in, and trading cryptocurrencies for nearly a decade now, the technology is just seeming to hit mainstream status and gain wider adoption. That means a lot of folks are starting to ask, “How can I use crypto in the real world?” One of the key technology pieces you’ll need to start spending cryptocurrencies with both online and brick-and-mortar retailers is the use of a cryptocurrency wallet or crypto wallet. But what exactly is a crypto wallet?
- What is a Cryptocurrency Wallet?
- Why Do You Need a Crypto Wallet?
- Common Crypto Wallet Features
- 7 Things to Consider When Choosing a Crypto Wallet?
What is a Cryptocurrency Wallet?
In much the same way that you might carry a wallet to store your id, cash, credit cards, and maybe coins, crypto wallets carry the keys to your digital currencies. That means that a crypto wallet is responsible for storing the passwords that grant access to your cryptocurrencies, keeping them safe and available for when you wish to spend, send, or receive them. They do not actually carry the currencies, just the keys which enable your access to them.
Crypto wallets come in a variety of forms from hardware, much like a USB drive, to mobile apps. Apps that work as crypto wallets keep your digital money easily accessible which means, often with a quick QR code scan, you can use your cryptocurrencies at both online and brick-and-mortar stores. Briefly, wallet types include:
Web-based Wallets- Web-based crypto wallets are typically hosted by crypto exchanges which means the security keys to access your crypto are managed by the exchange itself.
Mobile Wallets- Mobile wallets are apps on tablets or phones that allow users to access their cryptocurrencies through these devices.
Desktop Wallets- These days, desktops may seem a bit analog and dated, but desktop wallets function much like mobile wallets and are software-based.
Hardware Wallets- Hardware wallets are like USB drives that you can connect through a port to a computer granting access to your cryptocurrency keys and, therefore, your digital money.
Why Do You Need a Crypto Wallet?
For those unfamiliar with how cryptocurrency works, your crypto is actually stored in the blockchain, a digital ledger of financial transactions. Cryptocurrency wallets are sometimes referred to as blockchain wallets. Because crypto is digital and there isn’t anything tangible, blockchain technology enables cryptocurrencies to stay protected while enabling information sharing across other chains. It functions much like other financial statements in that there is a digital record of what was spent, shared, received, sent, and more.
If a cryptocurrency investor is simply aiming to hold those digital currencies, with no intention of trading, sending, spending, or transferring cryptocurrencies, there’s no need for a wallet. However, as crypto usage increases and more retailers accept cryptocurrencies, wallets become increasingly important for a crypto economy.
As you can’t just walk into a bank and ask for money without evidence of an account, your crypto wallet acts as your verification and validation that the digital money you’re trying to use belongs to you. Your passwords and keys, stored in your wallet, provide that verification. Because your passwords and keys are what give you access to your cryptocurrency funds, losing your crypto wallet is a bit more serious than losing an actual wallet.
Common Crypto Wallet Features
While not all crypto wallets are equal, there are some pretty standard features you should be looking for in your wallet choice:
- Cryptocurrency conversions (convert from one token to another or to fiat.
- Multiple transaction modes via NFC, QR codes, or a Bitcoin URL.
- Transaction history.
- QR Code Scanners.
- Automatic logout post-transaction.
- Real-time push notifications to view activity.
- Reasonable rates for processing transactions.
- Notification or denial of duplicate payments.
- Real-time information regarding crypto markets, conversions, and pricing.
While these features are pretty standard for most crypto wallets, you want to make sure you’re doing your research and ensuring you can get the most out of the wallet you select. For some crypto wallets, these features will be more robust, as will the security measures employed. However, some of these features will depend largely on the type of wallet you choose.
7 Things to Consider When Choosing a Crypto Wallet?
Now that we have a pretty clear understanding of what a crypto wallet is and how it functions, you may be considering choosing a crypto wallet for your digital currencies. While security (more on that in a moment) likely comes to mind as one of the most important aspects of the wallet you choose, there are quite a few things you’ll need to consider beyond that.
As noted above, if you’re simply looking at investing in cryptocurrencies with little desire to engage in transactions or transfers, then you may not even need a wallet. Knowing how you plan to use your cryptocurrencies will play a huge role in determining what type and which wallet you’ll want. For example, those using crypto to invest while engaging in some transactions such as spending in online shops, transferring, or sending funds, might want to consider a hardware wallet. Further, if you’re interested in also looking at the NFT market, make sure your wallet can handle that as well.
Do your due diligence, and get to know the company you’re entrusting, especially when using mobile and web-based wallets. You’ll want to look at the company’s background, security levels, and storage protocols, their history, and perhaps the background of its leadership team. You want to have the utmost confidence in your crypto wallet company. Further, consider what they’re offering in terms of product, their presence and transparency online, and more. Essentially, you’re trusting these folks with an investment.
The nightmare scenario for consumers and crypto-companies alike is a failure of software or hardware that wipes out data and info. You’ll want to make sure the wallet you choose is, therefore, providing you with regular and high-quality backups.
If you’ve already invested in cryptocurrencies, you’ll want to ensure that the wallet you choose enables you to use and access those cryptocurrencies. Further, if you intend to diversify those investments or your use of cryptocurrencies, you’ll want to choose a wallet that will facilitate that and enable you to explore as many tokens as you’d like.
Whether it’s converting one crypto into another or converting your crypto to fiat, you want to be sure the cryptocurrency wallet you select offers conversion features that will increase and improve your conversion experience.
Do you intend to use multiple wallets? Or would you prefer to use one wallet across multiple platforms? Knowing what kind of flexibility your wallet offers is vital.
7. Technologies Used
From open-source wallets that offer full transparency to proprietary code, understanding how your crypto wallet provider is handling their code, bugs, and updates, is essential. This, of course, goes back to number two on this list.
Further, for those choosing mobile wallets, if you intend to start spending crypto at the retailers who accept it, you’ll want to make sure it’s QR code enabled.
In short, you’ll want to shop around, read reviews, and get to know the landscape. As much as you do that though, you’ll also want to make sure you know how you want to use your crypto as the type of crypto wallet you choose may limit or inhibit that.
Finally, as crypto wallets and payment systems become a bigger market, there are more and more companies entering. As the space becomes more competitive, you’ll want to look for the companies that are seeking new ways to reward both retailers and customers for their loyalty and trust. That’s why PayBolt is excited to offer some of the lowest transfer fees out there as well as credit card-style rewards for purchases and more.
If you’re ready to explore PayBolt and all we have to offer, get in touch with our team today and let’s start talking about how we can simply crypto for you!