A handy cryptocurrency wallet

The cryptocurrency market is getting bigger and bigger every day, so for those interested in cryptocurrency wallets, it makes sense to learn a bit more about them, especially knowing that their variety is also growing! So, if you want to learn a bit more about cryptocurrency wallets, how they work, and what types of wallets you like best, then we recommend continuing reading this article!
101 about cryptocurrency wallets

Our base solution MEEG Wallet is used to store, receive and send your digital currency. It is based on our latest API, so we are constantly updating it to ensure the security and efficiency of all your cryptocurrency transactions. Thanks to the variety of methods in our API we can quickly provide you with all the features you need, creating a bespoke wallet with a tag just for your business.

Cryptocurrencies are entirely digital assets, so you can't store them in a traditional wallet or banking app like you would with fiat currency. Thus, cryptocurrencies work like traditional wallets, but only for your digital assets. You can store your public and private keys in cryptocurrencies and use them to exchange cryptocurrencies. Some types of crypto wallets even allow their users to perform certain manipulations of their crypto assets directly from the platform, which means you will have the ability to buy or sell cryptocurrency without having to use any additional apps.

The main difference between traditional and crypto wallets is the way you interact with your money. A cryptocurrency wallet itself doesn't store bitcoin or any other cryptocurrency, but it keeps your private keys safe and available for use. So you don't transfer your tokens immediately, you use your private and public keys to do so, and the signal that your keys send goes to the blockchain network, which then makes a transaction request and executes it over a period of time.

A cryptocurrency wallet got its name simply because of its convenience, after all we are all familiar with the word 'wallet'.

Private key vs public key
Both public and private keys exist as a long sequence of specific numbers. You can link your public key to your bank account number, which is open to all and can be used to send and receive certain cryptocurrency transactions.

A private key, however, works differently. Thus, your private key can be thought of as a PIN to your bank account, which means that it must be kept completely confidential and not accessible to anyone but you. Your private key basically proves that the specific public key, and therefore the crypto-purse, belongs to you and not to anyone else.
Cryptocurrency wallet, who needs one?

In our opinion, a cryptocurrency wallet is essential for anyone who owns almost any number of specific cryptocurrencies.

Regardless of which type of cryptocurrency wallet you prefer, storing your assets on an exchange platform is not safe, and certainly not safer than storing cryptocurrency in a specific cryptocurrency wallet.

While storing small amounts of digital currency on an exchange platform is fine, larger amounts should always be protected by a software or physical wallet designed specifically for your needs and type of cryptocurrency.

Types of cryptocurrency wallets

There are two main types of cryptocurrency wallets that you might want to consider for your assets: software wallets (hot wallets) and physical wallets (cold storage wallets).

Your choice of wallet type depends on your own needs, so it's best to read about them below and make a final decision knowing the pros and cons of each type of cryptocurrency storage wallet.

Hot wallets

A hot wallet is always connected to the internet, whereas a cold wallet is not. This means that, on the one hand, hot wallets are faster and allow you to work with your assets much faster, but, on the other hand, it is easier for hackers to gain access to them.

There are different types of hot online wallets on the market these days, but here are three of the most popular ones:

The most common scenario for using a hot wallet is storing private keys online inside that wallet. As you may have guessed, this is not the wisest choice: hackers will have no trouble breaking into your hot wallet and accessing your assets from there.

For those of you who want to store large amounts of cryptocurrencies in a hot wallet, you'll need to take care of additional security features, such as better encryption or additional devices to store private keys.

Hot wallets are still a decent form of cryptocurrency protection, but those of you who still need access to a software wallet to exchange cryptocurrencies would be better off using multiple wallets.

Cold wallets.

Cold storage wallets are considered the safest type of crypto wallet, so we always recommend using them instead of hot wallets.

A cold storage wallet is not directly connected to the internet, so it is almost impossible for hackers to access your assets.

Here are two types of cold wallets you can use:

Paper wallets are the easiest way to protect your private keys from the wrong hands. This way, you write down all your keys on a piece of paper and keep them in a safe place. Since hackers have no way of gaining access to your keys, paper wallets seem much more secure than hot wallets. However, there is always the risk of losing or destroying the paper wallet, which means losing access to all your money.

Hardware wallets such as the Ledger Nano X are the optimal choice for any cryptocurrency holder. The hardware device can be a simple USB or Bluetooth device that stores your keys, and you need to press a button to confirm the transaction.

Hardware wallets are definitely better than hot or paper wallets, but using a cold wallet means that all the security will be on you, and it's up to you to ensure that your cold wallet is not lost, destroyed or stolen.

At best, private and public keys should be kept in a self-contained vault, away from each other, and the devices themselves in a safe.

Custodial and non-custodial wallets

Apart from the above-mentioned wallet types, we can also divide wallets into two other categories - wallets with storage and wallets without storage.

Most web wallets are custodial wallets and are more convenient to use than non-custodial wallets. However, this convenience comes with a price: using custodial wallets means that you will no longer have access to your private keys, only the exchange platform will have access to them.

Thus, it is not worth creating a custodial wallet unless you are sure that the service provider is trustworthy and that you can use additional means to protect your assets. Two-factor authentication is a must for a custodial wallet, and biometric authentication is even better. A good indication that a platform can be trusted is the requirement to create such security measures before you can create an account.

A non-custodial wallet, as you might have already guessed, is the preferred option, but not always the most convenient. So, by using a non-storage wallet, such as a hardware wallet, you will have full control over your keys, and no other party will be able to access them without your consent.

A feature that is essential for any non-custodial wallet is the creation of a 12-word recovery phrase that you can use to create your keys or recover access to them in cases where you have lost or forgotten them. However, this recovery phrase can also be lost or forgotten and without it you have no chance of regaining access to your assets.

The final choice of the type of wallet you create is entirely up to you, so it is best to decide in advance whether you are someone who constantly forgets passwords and therefore needs a stored wallet, or whether you are fully capable of keeping your recovery phrase safe and therefore can choose non-stored wallets.

Best platforms for crypto wallets

These days, the popularity of cryptocurrencies is growing so fast that it can be hard to find the best cryptocurrency wallets.

So, here's a list of platforms that new cryptocurrency users can consider among all the other wallets to securely store their crypto-assets:

Initially set or custom transaction fees will always be present in any cryptocurrency wallet you choose, so it's best to consider other features (like the ones we described above) to find the best cryptocurrency firms and wallets for buying cryptocurrency or trading cryptocurrency.