Let’s say you get interested in cryptocurrencies and decided to buy different crypto coins. The next thing you need to do is to have a cryptocurrency wallet. A cryptocurrency wallet is a place where you can store your crypto coins. It can be a device, a physical medium, program, or service. As we all know, there are different kinds of coins and tokens available. So, the question is: do I need different wallets for different cryptocurrencies? Keep on reading to know more about cryptocurrency wallets, and when is the time that you need to have different wallets.
Understanding Some Terms
If you’re thinking about getting different wallets for different cryptocurrencies, think again. There are times when you will have to use different wallets for different cryptocurrencies, and there are also times you can use one for several crypto money.
Before we dive into the different types of cryptocurrency wallets, you need to familiarize some technical terms. This is so we can answer the main question: do I need different wallets for different cryptocurrencies?
- Hot Wallet and Cold Wallet – The difference between these two is that a hot wallet is connected to the internet while a cold wallet is not. Hot wallets are more user friendly, although they are less secure because it poses a risk to your privacy and security. On the other hand, a cold wallet is not connected to the internet, which means it is more secured and cannot be compromised. Cold wallets store the user’s address and private keys and work in conjunction with a compatible software in their computer.
- Public and Private Keys – When you have crypto coins, you will be given a public address and a private key. These will be used to send and receive coins and tokens. The funds will be deposited and accepted thru the public address, but you cannot withdraw them without the unique private key. The public key is from the private key created through a complicated mathematical algorithm.
- Multisig Wallet – This is a type of cryptocurrency wallet that requires input from multiple parties to complete a transaction. It can be compared to a shared bank account wherein all parties have to sign or enter their PIN to complete a transaction. This type of wallet is ideal for families and businesses.
- Multi-Currency Wallet – If you’ve asked, do I need different wallets for different cryptocurrencies? Well, this is it. Some wallets can hold only one type of cryptocurrency, while others can let you store various kinds of cryptocurrencies in one place. Some crypto wallets enable you to convert cryptocurrency A to cryptocurrency B. It is easier to use multi-currency wallets than using a different wallet for each coin.
The Types Of Crypto Wallets
You may have asked; do I need different wallets for different cryptocurrencies when buying digital money. The thing is, some crypto wallets allow you to use several types of coins and tokens while others can convert a certain type of coin into another one.
There are five different types of crypto wallets, and each type has different levels of security to ensure your private keys’ safety.
1. Online Wallet
This is the type of crypto wallet that you can access using your web browser. Many people use this as it is the fastest way to complete transactions. You do not have to worry about the lag between the locations of the app and server. Also, it is ideal for holding small amounts of crypto money. However, using this type of crypto wallet makes users susceptible to phishing scams, malware, insider hacking, DDOS attacks, and more since your coin information is stored on a third-party. This also makes your computer open to malware and viruses.
2. Mobile Wallet
One of the advantages of using a mobile wallet is that it gives users access to their cryptocurrencies wherever they are as long as they are with their mobile devices. It is ideal to use when accepting to sending payments on the fly. This type of wallet also has additional features that are completely Internet-based, such as QR code scanning. The disadvantage of using this type of wallet is that it has additional security risks. Since mobile phones are not that reliable, your crypto will be at risk, especially when your phone has been maliciously compromised. It will also make your phone vulnerable to malware, keyloggers, and viruses.
3. Desktop Wallet
One of the most popular cryptocurrency types of wallets is the Desktop Wallet. It is considered more secure compared to online and mobile wallets. But still, that much depends on how committed you are to online security. This wallet is very easy to use, and if your device has never “been kissed” by an Internet connection, it will make the ideal cold storage solution as private keys are not stored on a third-party server. However, once it is connected to the internet, there will be security and privacy caveats. One of the biggest, most common issue here is when the user forgets to back up files, and the computer dies, then they’re doomed.
4. Hardware Wallet
This type of cryptocurrency wallet is a little bit less user-friendly than web wallets and desktop wallets, but this is easier and more secured than paper wallets. Some hardware wallets need batteries, while others don’t. Some have screens, and some don’t. Those that have screens don’t need a computer to back up their private keys. Hardware wallets are excellent in storing large amounts of digital money that users do not need to move around often. They also offer more control. Using this type of wallet, however, can be cumbersome to use for beginners. They are also usually sold out. If you are interested in using this wallet, try looking for it on Amazon.
5. Paper Wallet
The paper wallet was the defacto standard for cold storage of digital currencies. This type of wallet is one of the most hacker-proof choices as it is not stored on a computer, and the private keys are also not stored on a third-party server. However, it required more effort in moving cryptocurrencies around and needs more technical understanding.
Knowing these common types of crypto wallets will let you know, understand, and answer your question: do I need different wallets for different cryptocurrencies. Note that you will also consider what coins or tokens you want to buy and your purpose for buying those. Learn more about cryptocurrency wallets here!
When it comes to cryptocurrency wallets, there is no “my dad is better than your dad” scenario. Asking do I need different wallets for different cryptocurrencies is a common question. Still, it is essential to note that the first thing you need to know is understanding what crypto wallets exactly are. And the first step to do that is to know what you want to accomplish with your cryptocurrencies.