Bitcoin and other cryptocurrencies have become increasingly popular over the last few years. The Bitcoin price jumped from $10,764 in September 2020 to $58,734 in March 2021, all throughout the COVID-19 economic downtown. As a result, bitcoin is becoming more mainstream and regularly spoken about in the media.
Sadly, many people don’t have a clue where to begin. But before you even begin, you’ll need a wallet.
What Is a Cryptocurrency Wallet?
A cryptocurrency wallet — often referred to as a crypto wallet or a bitcoin wallet — operates like a regular wallet, but instead of holding cash, it holds cryptocurrency. The cryptocurrency wallet will store the private and public keys to purchasing bitcoin and other cryptocurrencies. You’ll need to keep your private key safe and secure.
Do I Need a Cryptocurrency Wallet to Trade Cryptocurrency?
The simple answer is yes, you do. Although various cryptocurrency exchanges will suggest wallets for your use, if you’re looking to buy cryptocurrency or bitcoin, you will need a wallet address to transfer and store digital currency.
The Different Types of Cryptocurrency Wallets
There are a wide variety of cryptocurrency wallets, and each wallet has its own pros and cons. However, keeping your wallet safe and secure is the most important thing. Here are the two main types of cryptocurrency wallets:
1) Hot Storage Cryptocurrency Wallets
Hot storage cryptocurrency wallets are connected to the internet through a mobile phone app, desktop software, or an online provider. These services are entirely free, but many contain security issues due to being connected to the internet.
However, cryptocurrency wallet providers are getting better at securing their wallets. While cryptocurrency theft dropped by 57% last year, hackers still stole $1.9 billion.
- Desktop wallets – Desktop wallets run on your computer or laptop. The biggest advantage of using a desktop wallet is having complete control of your funds. Therefore, third parties can’t control your funds or freeze them. Even still, security remains an ongoing worry.
- Mobile wallet – Mobile wallets run on your mobile phone through IOS or Android software. These apps often allow face-to-face payments and have QR codes to make quick payments. Similar to desktop wallets, you’re in control of your cryptocurrency investments, but security is still a risk.
- Web wallets – Web wallets are browser-based wallets on mobile phones or desktops. Popular options include Robinhood and Coinbase. However, they don’t provide the full control offered by mobile wallets or desktop wallets.
2) Cold Storage Bitcoin Wallets
Cold storage cryptocurrency wallets are popular options as they are small encrypted portable devices enabling users to carry and download their bitcoin or other cryptocurrencies. Cold wallets aren’t free, and they often cost up to $100 and above. That said, they’re more secure than hot wallets.
What Cryptocurrency Wallet Is Best for You?
What is the best cryptocurrency wallet? There are many to choose from. You’ll need to conduct some research to find the best wallet to meet your needs. For cryptocurrency traders who have lots of cryptocurrency investments, the combination of hot wallets for quick trading and cold wallets for long-term assets is an excellent idea.
Remember, cryptocurrency is often highly volatile. You shouldn’t own more than you can afford to lose. We all witnessed the drop in bitcoin earlier in 2021, which caused those who invested too much to lose large chunks of their savings. China’s continual clampdown on cryptocurrency — including recently making all crypto transactions illegal — is causing high volatility.
What Online Brokers Offer Bitcoin?
- Webull – Webull offered four cryptocurrencies for trading. These are Bitcoin, Bitcoin Cash, Litecoin, and Ethereum.
- Robinhood – Robinhood is one of the most popular online brokers. They offer seven cryptocurrencies, including Ethereum, Bitcoin, and Bitcoin Cash.
- TradeStation – Tradestation offers five cryptocurrencies such as Ethereum, Bitcoin, and Bitcoin Cash.
- Gemini – Gemini allows you to purchase up to 40 cryptocurrencies
- eToro – eToro is one of the world’s leading cryptocurrency providers, offering trading access to over 18 cryptocurrencies
- Coinbase – Coinbase offers users the ability to buy up to 40 cryptocurrencies.
- Binance.US – Binance.US is one of the most popular platforms, enabling users to buy up to 50 cryptocurrencies
Final Thoughts
Investing in cryptocurrency if you’re a beginner can appear daunting. Digital currencies are volatile and often risky. But, if you invest wisely, you can build some excellent assets. Before you purchase any cryptocurrencies or Bitcoin, you’ll need to create a wallet and choose an online broker. By following the above guide, you should be well on your way to starting your crypto journey.
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