September 15, 2021

A Detailed Guide to Choose a Digital Wallet

The Crypto world is quite huge, and a bitcoin wallet is an integral part of investing or trading cryptocurrencies.

Whether you have decided to invest in bitcoin for the long term or trade bitcoin to earn money, a bitcoin wallet is essential in whatever decision you take.

A Detailed Guide to Choose a Digital Wallet!: eAskme
A Detailed Guide to Choose a Digital Wallet!: eAskme

Along with investing or trading bitcoin, every bitcoin user needs to think and learn about choosing a secure bitcoin wallet.

Numerous innovations have been made in the crypto world to date, and as we look in 2021, there are countless good options of secured bitcoin wallets that can help you secure your coins.

Along with choosing the best wallet, it is crucial to learn what digital wallets are, how they store coins and the factors that must be considered while selecting a digital wallet.

What are digital wallets?

One of the main misconceptions in the minds of wallets users is that digital wallets work in the same way as traditional wallets do.

The main difference between both wallets is that digital wallets don't technically store your cryptocurrencies.

Cryptocurrencies like bitcoin are decentralized and public, which means that no one can own or store these coins in one location, and instead, the transactions are recorded on the blockchain.

  • Digital wallets are software programs that store information of public and private keys of the wallet.
  • Digital wallets are the same as bank accounts that allow users to secure, track their coins and make transactions.

However, cryptocurrencies are digital, and the wallets are also digital, which means that there are no actual coins and no transactions of real coins occur from one place to another.

How do public and private keys work?

Both the digital keys are a long string of letters and numbers that are generated randomly.

  • The public key is public, which means all other users can see it and share it.
  • The public key is generated from the secret key via a hash.
  • The public key is a wallet address used to receive crypto coins in your digital wallet.
  • A private key is a secret key that must be kept confidential. No user should share their private key with other users.

A user can only send or make payments of cryptocurrencies through private keys, and without private keys, it is impossible to approve bitcoin transactions.

Therefore, private keys need to be kept at a safe place where no one has access, and in case if you lose your private keys, you will lose access to your coins.

Various types of digital wallet

The two major categories of the digital wallet include custodial and non-custodial wallets.

Custodial wallets are the wallets that are centralized that provide users with an interface to manage crypto coins.

Non-custodial wallets are those that users manage by themselves, which means they are entirely decentralized.

There are five different digital wallets categorized under these two wallets: hardware, paper, desktop, mobile, and online wallets.

  • Hardware wallets are considered the best option to store your crypto coins for the long term. These wallets offer high security to coins and protect them from cyber threats.
  • Paper wallets are the most straightforward wallets on paper and allow users to store their public and private keys on paper in QR code form.
  • Mobile wallets are designed to operate on smartphones. These are best for users that use bitcoin to carry out daily transactions.
  • Finally, online wallets provide high convenience as users can manage these wallets from anywhere and from any device through an internet connection.

How to choose a digital wallet?

Choosing the right digital wallet depends on your needs and preferences.

There are a set of practical questions that every user must evaluate before choosing a wallet that include:

  • Do you need quick and daily access to your digital wallet?
  • Will you store all your cryptocurrencies in one wallet?
  • What are the costs that the wallet service provider charges?
  • Is security your top priority?
  • Is your wallet easy to use?
  • What convenience does your wallet service provider offer you?

These are some of the most important questions that you need to work on, which will help you find a secure wallet for your cryptocurrencies.

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