Crypto Wallets: How to Store Crypto Safely
Securing your cryptocurrency is paramount, and selecting the right storage method plays a crucial role. To begin, you’ll require a cryptocurrency wallet, and the market offers a variety of options, including hardware wallets, software wallets, custodial, and non-custodial wallets. This blog will explore the distinctions between each type, assisting you in determining which suits your requirements most effectively.
How do crypto wallets function?
It’s important to note that crypto wallets don’t “hold” your cryptocurrency directly; rather, your crypto assets are stored on the blockchain.
A crypto wallet houses the private keys that serve as authorization for crypto transactions, enabling you to engage in activities such as buying, selling, or spending your cryptocurrency.
Hardware wallets vs. software wallets
Crypto wallets can take either physical or digital forms.
A hardware crypto wallet, also referred to as a cold storage wallet, is a physical device that stores your cryptocurrency offline. These wallets do not rely on online servers and grant access to the assets only when connected to a computer via the private key.
In contrast, a software wallet is purely digital. It exists as a software program, such as apps like The Blockchain.com App, and typically offers more features than a hardware wallet.
Custodial vs. non-custodial wallets
In addition to hardware and software wallets, crypto wallets can be further categorized into custodial and non-custodial wallets.
A custodial wallet relies on a “custodian,” such as a third-party exchange, to safeguard your private keys on your behalf. Conversely, a non-custodial wallet grants the user complete control and direct access to their private keys.
What is a custodial wallet?
A custodial wallet can be likened to an account managed by a third party.
These wallets offer convenience as they eliminate the concern of losing or managing private keys on your own. However, since a third party handles your cryptocurrency, they also have control over your crypto keys. Consequently, if the company faces financial issues or suffers a security breach, your crypto assets could be exposed to potential risks.
What is a non-custodial wallet?
In a non-custodial wallet, you are the sole owner with access to your private keys.
This exclusivity makes non-custodial wallets significantly more secure than custodial ones. Even if a non-custodial wallet is targeted by hackers, your crypto remains safe because the hacker lacks access to your private keys.
Selecting a crypto wallet
When deciding between a custodial or non-custodial wallet, each option comes with its own advantages and tradeoffs. The crucial factor is to identify the wallet that aligns best with your requirements. Fortunately, you can explore both options within the Blockchain.com App.
Head to Blockchain.com to register for a complimentary wallet today.
IMPORTANT REMINDER: Acquiring cryptocurrencies carries inherent risks. The value of cryptocurrencies can be highly volatile, and the capital invested in crypto transactions is subject to market fluctuations and potential losses. Digital currencies are not equivalent to bank deposits, they are not recognized as legal tender, and they are not backed by any government authority. Blockchain.com’s products and services are not protected under any government or government-backed deposit guarantee programs. Legislative and regulatory changes or actions in any jurisdiction where Blockchain.com’s customers reside may have adverse impacts on the use, transfer, exchange, and value of digital currencies.