Why Is A Crypto Wallet Good For Beginners?

In the last five years, the crypto world has grown by leaps and bounds. Everyone, including big corporate houses, financial institutions, governments, individuals, etc., across the globe, are getting into crypto with each passing day. Even if you are yet to invest in crypto, you must have come across someone who does or comes across the ads for it all over the internet. So, if you are thinking about getting into crypto or are a beginner in it and wondering why is a crypto wallet good for beginners? We will tell you about the crypto wallet and why you should get one.

Let’s dive in.

What Is A Crypto Wallet

Think of a regular wallet that you use to keep your money in and extrapolate it to crypto. That is exactly what a crypto wallet is in simple terms. But it has a bit more functionalities, unlike a regular wallet. For example, not only does a crypto wallet store your cryptocurrencies, but it can also be used to store NFTs as well.

On top of that, it keeps a record of the data encryption that validates your transactions on the blockchain. A crypto wallet also records the location where your token is stored on the blockchain. In a crypto wallet, you have two different kinds of keys, Private Keys and Public Keys. Public keys are nothing but the deposit addresses of tokens in your wallet, like your bank account number. Private keys are used to access your wallet and keep your assets secure. If you lose or forget your private keys, it becomes next to impossible to access your tokens. A crypto wallet can be of multiple types, as explained below.

Types Of Crypto Wallets

Software Wallet

A software wallet is also known as a Hot Wallet because it is connected to the internet at all times. If you are trading or investing on an exchange, be it centralized or decentralized, your crypto assets are stored in a software wallet. CoinStats Wallet is one of the best software wallets available worldwide alongside Metamask, Trust Wallet, etc.

CoinStats Wallet

Hardware Wallet

A hardware wallet is also known as a Cold Wallet as it is not connected to the internet at all times and is only connected when you need to access or use your tokens. Ledger Nano S, Ledger Nano X, Trezor Model One, etc., are some of the best hardware wallets available.

Custodial Wallet

A custodial wallet is one where a third party controls your wallet. For e.g. if you use a wallet of crypto exchange to store your assets, that wallet is a custodial wallet, as the exchange has control over it even though it belongs to you. While it provides much more functionality, the safety of your assets in a custodial wallet is as good as the security measures of the exchange.

Non-Custodial Wallet

A non-custodial wallet is also known as a self-custody wallet, i.e. you have total control over it. A hardware wallet is a good example of a non-custodial wallet. However, while wallets like these provide more security, the functionality can get hampered. So you have to weigh the pros and cons according to your liking.

Now that you are aware of what a crypto wallet is and the different kinds of crypto wallets, let us see why is a crypto wallet good for beginners.

Why Is A Crypto Wallet Good For Beginners

1. Easy to Use

It might seem like crypto wallets require too much work, especially for beginners, but that is not the case. Nowadays crypto wallets are very easy and simple to use and can support hundreds and thousands of cryptocurrencies in a single wallet. They are also customizable and many wallets allow you to stake your tokens and earn dividends or do yield farming using DeFi protocols. So this way, your tokens not only stay safe, but they also let you earn passively.

2. Good for long-term use

Getting a crypto wallet is a good option if you wish to hold your cryptocurrency tokens for the long term. The only condition is that you remember to store your seed phrase in a safe and secure location. Moreover, as crypto gains real-world adoption slowly and steadily, a lot of companies are going to accept crypto as a mode of payment in the future. Thus, your crypto wallet will come in handy in those situations.

3. Protects User Information

With the world that we live in that is becoming more and more intrusive into your private data, having a crypto wallet will ensure that your privacy and financial records are not available in public. It would also protect your assets from online attacks and hackers to a very large extent thus keeping your investment secure.

4. Manage your Portfolio

Any good crypto wallet lets you manage your entire portfolio in one place and keep track of all the price movement across your various crypto assets. This becomes important as the crypto market is highly volatile and the prices can fluctuate highly in a small amount of time.

5. Have Total Control Over Your Assets

Suppose you store your crypto on wallets of exchanges that you use. In that case, your crypto assets are never really under your control and there are instances when exchanges halt withdrawals or trade across some asset or the other, as seen recently during the LUNA crash. Thus, having your crypto wallet gives you absolute control over your assets.

Conclusion

No matter what your level of experience in crypto is, having your crypto wallet is always a good idea. More so, if you are a beginner as the habits formed early will help you in the long run. And in this way, you can invest in your favorite cryptocurrencies without worrying about their safety and security.