A cryptocurrency wallet is a software (programme) or hardware (device) that lets you store your digital coins safely.
Software wallets are also called hot wallets and store your private keys in a program connected to the internet. Like almost any software nowadays, it can be accessed via a desktop app, mobile app, or web browser. One of the most important features to look for when selecting a software wallet is two-factor authentication (2FA), as it strengthens security and provides ease of use.
Many hot crypto wallets are non-custodial, which means they give access to the private keys and the responsibility of its safekeeping to the owner. This type of crypto storage is usually considered much safer than custodial crypto exchanges, as long as wallets’ owners take proper care of them and back up their keys. However, it’s important to keep in mind that some hot wallets are custodial too, and do not provide access to a private key.
Hardware wallets, also known as cold wallets, store crypto access offline and are usually no larger than a USB flash drive. This type of wallet is considered a safer option because the device is only connected to the internet when you need to use your crypto, making it much harder to hack. The important security measure, in this case, is just keeping the device safe.
Until very recently, the third type – a paper wallet, used to be considered the most secure way to protect crypto assets. A paper wallet literally means keeping your private key written or printed on a piece of paper. However, since there is a high risk of misplacing or damaging it, this type of wallet is gradually losing its popularity.
Both cold and paper wallet types are completely non-custodial.
Choosing one type of crypto storage over another is purely a matter of personal preference. But do remember that it is crucial to do your research and ensure that the service provider is well-trusted and not fraudulent.
Meanwhile, while reviewing your options, why don’t you create a demo account to practice your trading skills risk-free? Once you feel confident, you can switch to trading with crypto to potentially make more crypto without buying it.
This content is not intended to clients residing in the UK.
Hope this information helps