We are living in a digital era, where it's not just our files and documents that are stored digitally, but our money can be stored digitally as well! So how can we store digital currency securely?
If you are a financial professional in any business and you buy digital currency on any platform such as a trading platform or exchange, you may have multiple options to store it. For instance, you may have the option to leave the “keys” to your coins within the account, but you also have an option to move your digital currency to a personal wallet known as a cryptocurrency wallet. Cryptocurrency is digital currency, secured by cryptography, which resides on decentralized networks based on blockchain technology.
Cryptocurrency wallets such as Bitcoin wallets are personal wallets. Crypto-wallets provide users with a digital solution for securely storing and managing blockchain assets and currencies. These digital wallets could be of different types such as paper wallet, custodial wallet, internet-connected software wallet (web wallet) or an offline hardware-based wallet, also known as a cold-storage wallet.
In this buyer's guide, we’ll explain what a cryptocurrency wallet is, its common features, its benefits, selection considerations, and the latest trends that software buyers should not overlook.
Here's what we'll cover:
What is a cryptocurrency wallet?
A cryptocurrency wallet is a software program that helps businesses securely purchase, store, sell and manage various cryptocurrencies and blockchain assets. These digital wallets allow users to spend, receive, trade, and manage cryptocurrencies.
A crypto-wallet does not physically store blockchain assets. Instead, crypto-wallets securely store public keys as well as private keys that authenticate the ownership of your digital money and allow you to make crypto-transactions. Public keys point to the address of your funds on the currency’s blockchain and are shared when you wish to receive payments. On the other hand, private keys are unique to an individual’s cryptocurrency wallet, which are never shared, and are required to conduct any transactions related to their cryptocurrency assets.
While many crypto-wallets allow users to hold multiple currencies such as Bitcoin, Ethereum, and Dogecoin, others will only support a single cryptocurrency. Crypto-wallet solutions ensure that the cryptocurrency owner is the only entity who can access the funds by requiring elaborate passwords and other security measures. Users can access cryptocurrency wallets from their smartphones as well as computers.
Cryptocurrency wallets can be utilized by multiple businesses accepting payments through cryptocurrency payment gateways to securely store or exchange blockchain assets.
Cryptocurrency sending and receiving in Electrum Software (Source)
Common features of a cryptocurrency wallet
Below are some common features in a cryptocurrency wallet software that prospective buyers should not ignore:
|Cryptocurrency sending and receiving
||Send and receive digital currencies such as cryptocurrency using a digital wallet.
||Store public and private keys for your digital currency.
||Metrics on all the transactions involving cryptocurrency in real time.
||Sell or buy digital currency or convert fiat currency into digital currency using a crypto-exchange website or service.
||Security measures to ensure that private keys are only accessed by the owner of the cryptocurrency assets.
||Support and store more than one crypto-asset in the digital wallet.
||Store history of each and every crypto-transaction pointing to where the cryptocurrency was first produced.
||Manage crypto-transactions such as amount transferred, issuer’s available funds, recipients, and more.
What type of buyer are you?
Before evaluating crypto-wallet software, it is recommended to determine your use case:
- Retailers: Many online retailers and stores are already accepting cryptocurrencies such as Bitcoin. Retailers can invest in cryptocurrency wallets that allow users to shop using digital currency. It can help them in certain ways such as online payment with digital coins, payment of wages, and secure international transfers.
- Banking: While in many regions economies are still largely cash-driven and people cannot afford to pay for transportation to visit banks for registration, the number of those who have access to mobile phones is increasing. Thus, using a crypto-wallet to transfer digital currency, which is independent of traditional banks, is proving to be a viable option for people. Banks can use cryptocurrency wallets such as Bitcoin wallet for a number of operations such as processing payments, providing escrow services, facilitating international cash transactions, helping customers exchange their money for coins, and even lending loans in the currency.
- Ecommerce business: An ecommerce business can invest in crypto-wallets with good transaction management. Customers can visit their online marketplace, purchase items, and make payments in the form of digital currency.
Benefits of a cryptocurrency wallet
Here are the key benefits of a crypto-wallet:
- Bigger-picture solution: Cryptocurrency wallets are becoming increasingly reliable as a method to store and manage digital currencies. Investing in cryptocurrency wallets can be a long-term solution for investment and expenditure both, allowing global transactions to take place more easily in the long run.
- No struggle with currency conversion: With your digital currency stored in cryptocurrency wallets, you can skip the hassle of having to receive and convert your digital currencies at different stages, in different geographical locations. In addition, there is no delay in receiving payments and there are also no fees to pay. It saves money, time, and calculation.
- Secure financial transactions: Blockchain-based cryptocurrency wallets come with reliable infrastructure that help people and businesses make easy transactions. These crypto-wallets have the same interface throughout and are in sync with data that is then replicated in the same way all over the access area. In addition, the chances of transactions collapsing with blockchain technology are also extremely rare, which makes them a reliable and dependable program to use for cryptocurrency storage.
Key considerations when selecting a cryptocurrency wallet
- Multiple coin options: Invest in a well-established crypto-wallet software that lets you hold multiple kinds of coins. While Bitcoin may be the best-known digital coin available on the crypto-market, it is far from the only one. Since there are many coins to choose from, each of which come with its unique features, it becomes important to look out for a wallet provider that supports coins of your interest.
- Security: The overall security of a crypto-wallet is something that you should not ignore. When you or your customers invest money in a digital coin, you will want to know that it is protected and encrypted. Investing in a secure crypto-wallet will make sure that you know your data, information, and access to your investment are properly safeguarded. Crypto-wallets come with features such as a secure sign-in process that will require you to provide a dedicated password and an encrypted user ID. This can help to ensure that people are not able to access your account unless you want them to be able to do so.
- Support system: When you have invested your money digitally, it can be stressful if you don’t know how to manage it. However, your concerns will be set aside if there is a dedicated service that you can receive from the support team. Make sure that the crypto-wallet provider has a dedicated support team that works to ensure that you understand all of the features, are able to access your account at all times, and have any questions answered.
Note: The application selected in this guide is an example to show a feature in context and is not intended as an endorsement or recommendation. It has been taken from sources believed to be reliable at the time of publication.