After being dismissed as a passing fad by a lot of finance pundits again and again, cryptocurrency and crypto wallet are here to stay. The adoption rate of cryptocurrency as of December 2021 rose by over 178% to 205 million users and is projected to rise to about a billion users by the end of 2022. Bitcoin had it best year in 2021 when it reached an all-time peak price of $67,566.83 on Nov. 8, 2021.
Today there is over 20,000 cryptocurrencies available with an all time high of $1.09 Trillion as the total market cap of all cryptocurrencies.
Cryptocurrencies today serve not only as a store of value but also a myriad of purposes such as for anonymity, for exchange of information, for automation, for security and so on. And as most store of values, cryptocurrencies need to be kept securely.

With the world evolving with cryptocurrency, new threats also evolve.

Cryptocurrency storage systems can be hacked by bad actors as the Mt. Gox hack of 2014 and all other subsequent hacks show.
The hack of cryptocurrency exchanges and wallets have been on an exponential rise which highlight the importance of safe and secure storage of cryptocurrency. In this article we will go over how to store cryptocurrencies safely and share all other relevant information. Let’s get started;

• What is cryptocurrency?

The first thing to know about cryptocurrencies is that it was created as an alternative to the centralized system all governments practice today. It was founded upon the idea that anonymity and privacy is a fundamental part of the human nature/existence.
A cryptocurrency is a digital currency which resides on a digital ledger called the blockchain. A blockchain is immutable which means it cannot be altered or deleted because it doesn’t reside on a central server. It is truly decentralized.
The oxford dictionary describes cryptocurrency as “a digital currency in which transactions are verified and records maintained by a decentralized system using cryptography, rather than by a centralized authority”. Cryptocurrency is protected by cryptography (encryption), making it almost virtually impossible to forge or double-spend. The most popular cryptocurrencies being bitcoin, Ethereum, Solana, Cardano, Litecoin. Bitcoin is believed to be the first cryptocurrency; it rose to prominence in 2008 and is regularly referred to as “digital gold”.

• Why use a cryptocurrency wallet?

Some new investors or speculators of cryptocurrency leave their cryptocurrencies on crypto exchanges. A crypto exchange can be described as a marketplace for selling and buying cryptocurrencies. But true crypto purists keep their cryptocurrencies on a crypto wallet.
This is because putting your cryptocurrencies on a wallet guarantee that it cannot be accessed without your approval. Also placing cryptocurrencies in wallet gives easy access to the owner because the private key for accessing crypto funds will always be only in the possession of the owner of the cryptocurrencies.
If a user of cryptocurrencies intends to actively buy and sell cryptocurrencies then a crypto wallet is recommended for security and accessibility. Wallets can also house digital valuables such as NFTs that you may desire to purchase, sell, trade, or transfer to another person or wallet. They can facilitate the transfer of digital currency to and from other people’s accounts, crypto exchanges, or digital marketplaces. Furthermore, because they are often dispersed, a user is ultimately responsible for remembering their private keys or mnemonics words.

• What is a cryptocurrency wallet?

A cryptocurrency wallet, like a traditional wallet, is a location to save your digital currency when you’re not using it. A cryptocurrency wallet is an application that serves as a cryptocurrency wallet. It is termed a wallet because it functions similarly to a wallet in which cash and cards are stored. Instead of these actual goods, it stores the passkeys you use to sign bitcoin transactions and offers the interface via which you may access your money.
The blockchain is now available to everyone thanks to modern bitcoin wallets. Sending bitcoin was a laborious activity that needed lengthy keys when it was initially launched. Nowadays, the program does the majority of the work for you.
Crypto wallets do not technically store your cryptocurrency. Your assets are stored on the blockchain but can only be accessed with a private key. Your keys validate your ownership of your digital currency and allow you to conduct transactions. You lose access to your money if you lose your private keys. That is why it is critical to keep your hardware wallet secure or to utilize a reputable wallet service.

• How does a crypto wallet work?

Crypto wallets range in complexity from basic applications to more advanced security solutions. Though each kind works slightly differently, they are all meant to provide safe access to whatever cryptocurrency you hold.
It should be noted that a crypto wallet does not contain any actual cryptocurrency. It instead stores the public and private key information required for crypto transactions. The coin is held on a blockchain, which is a form of digital record that serves as the foundation for numerous decentralized cryptocurrencies.
Individuals can use a physical wallet to store fiat cash or bank and credit cards, allowing them to access funds. A crypto wallet does not actually store cryptocurrency, but rather the privileged credentials required to access it in the form of private keys to gain access to the blockchain for a certain coin.
The public key on a bitcoin blockchain performs the same fundamental function as a bank account number. Simply knowing a bank account number or a public key isn’t enough to execute a full range of transactions with an account. Blockchain employs a public key infrastructure model for cryptography, in which a public key and a private key are only meant to be known by users who possess a certain asset or cryptocurrency.
To access and transfer bitcoin, both a public and private key are required. Similarly, to how a private personal identification number is used to access a bank account. A private key is required to access the asset on a blockchain, much as a private personal identification number is required to access a bank account with a bank card.
Crypto wallets store users’ private keys as well as information on where the public keys are on the blockchain. A crypto wallet can enable a safe operation to validate a balance and transmit or receive bitcoin transactions by combining both public and private keys.
Cryptocurrency wallets are software programs that run on desktops or mobile devices like phones and tablets. They link to the blockchain network for the cryptocurrency you’re utilizing through an internet connection. Cryptocurrencies are not “stored” somewhere; instead, they are pieces of data in a database. These pieces of information are all over the place.
These bits of data are dispersed across the database; the wallet locates all of the bits linked with your public address and totals the amount for you via the app’s UI.
Cryptocurrency wallets are software programs that run on desktops or mobile devices like phones and tablets. They link to the blockchain network for the cryptocurrency you’re utilizing through an internet connection. Cryptocurrencies are not “stored” somewhere; instead, they are pieces of data in a database. These bits of data are dispersed across the database; the wallet locates all of the bits linked with your public address and totals the amount for you via the app’s UI.

• Features of a cryptocurrency wallet

1. Simple to use. It works much like any other piece of software or wallet you use for day-to-day transactions.
2. Extremely secure. It is just a matter of safeguarding your private key.
3. Allows for immediate cross-border transactions. And they are barrier-free, with no intermediaries.
4. Low transaction fees. The cost of moving funds is significantly lower than with traditional banks.
5. Allows for cross-currency transactions. This allows for simple currency conversions.
6. Being able to transfer and receive cryptocurrency at any moment.
7. Being immune to hackers (hackers target exchanges that have large amounts of crypto).
8. Being resistant to government overreach (the government cannot just have the exchange hand them your crypto).
9. Being able to stake your cryptocurrency for passive revenue.
10. There is no need to be concerned about a website’s server or coding.
11. It’s simple to use and visually appealing.
12. There are user-readable addresses.
13. Allows users to store several cryptos such as Bitcoin and Ether.

• Classes of wallets: Custodial and non-custodial wallets

A public key is essentially your crypto wallet’s address. This is a public data point, similar to your home address. To deposit cryptocurrency into a wallet, just enter the public key as the deposit address. The two keys are used in tandem to transfer bitcoin from one wallet to another. Wallets for software. Bitstamp, Mt. Gox, QuadrigaCX, and BTC-e This is analogous to using your handle in a service like Venmo or CashApp. This results in a very easy answer for the user, but it also introduces an extra degree of danger.
A private key, like to the key to your front door, is used to authorize cryptocurrency transfers out of a wallet. The individual who possesses the private keys to a wallet essentially controls (owns) the money contained inside. Misplacing private keys may be expensive. To optimize security and preserve private keys, users must adopt a set of habits.
Custodial wallets are financial services provided by a centralized organization, for example a cryptocurrency exchange. With the escalation of the war in Ukraine, several governments have prohibited custodial wallets from completing transactions for individuals in specific locations.
Because non-custodian wallets do not necessitate the delegation of trust to an institution, no institution may refuse to perform transactions.

• Types of wallets

A hot wallet is always, or nearly constantly, linked to the internet. This is the most convenient sort of crypto wallet since you must be connected to the internet to transact. Cold wallets are often in the form of a crypto hardware wallet, which is a specialized device that is hooked into your USB port or accessible by Bluetooth.
This is the most secure sort of crypto wallet, but it lacks the convenience of a hot wallet, which allows you to trade and move your cryptocurrency cash fast. Even while in operation, a crypto hardware wallet is still termed a cold wallet.

• Recommended wallets

Atomic Wallet allows users to store over 400 cryptocurrencies, and it also allows users to purchase, swap, or stake digital assets straight from their wallets. Unlike some of its rivals, Atomic Wallet does not allow you to connect your holdings directly to cold storage.
More than 400 assets are supported.

No, it cannot be converted to cold storage.

Electrum is an unusual wallet in that it only supports one coin. This open-source, free software supports two-factor authentication, simple connectivity to cold storage, and multi-signature transactions (which require the sign-off multiple users). Electrum only has a desktop software, but the capabilities it provides for Bitcoin advanced users set it apart.
Exodus provides a good suite of applications, including a mobile app, a desktop client, and a browser extension. Its products let users to purchase, sell, or stake cryptocurrencies straight from their wallets, and it includes an interaction with the Trezor cold wallet to facilitate the transfer of cryptocurrency from hot to cold storage. Exodus supports about 150 coins, including several major assets.
Guarda is a free, all-purpose cryptocurrency wallet that users may access by mobile, desktop, or browser plugin. It claims to support over 400,000 digital items. Guarda users may store their cryptocurrency in cold storage thanks to an interface with the hardware wallet Ledger.
If you use Ethereum blockchain apps on a regular basis, you’ve probably come across MetaMask. It a free and open-source, can store any digital asset generated on Ethereum (there are more than 500,000). MetaMask offers mobile and browser-based wallets, but no desktop software. However, you may easily stake tokens using the web applications that link to MetaMask.
Trust Wallet is another storage device that works in collaboration with a large cryptocurrency exchange. It is, however, completely open-source, something just a few rivals can claim. More than a million assets are supported. No, it cannot be converted to cold storage.
Cold wallets are often devices that allow you to save sensitive crypto information on a device that is not connected to the internet. Ledger is a well-known brand in the world of cryptocurrency wallets. Its pricing ranges from $79 to $149, and it may be integrated with a variety of popular software wallets, including Crypto.com and Guarda. Ledger also supports 2FA. More than 5,500 assets are supported.

• Conclusion

The storage of cryptocurrency is an act that should be taken as seriously as picking a bank one intends to conduct financial transactions with. This is because the right choice can mean a lot, so can the wrong one.