If you want to own a bitcoin or other cryptocurrency, you definitely need a wallet. Since cryptocurrency is a form of digital currency, the container that will hold it is also in digital form. Each cryptocurrency implements its own wallet. A wallet is a container of addresses and keys. It is like a database of addresses. Some people misunderstood wallets as container of coins. In physical world it’s true. But in cryptocurrency concept, wallet stores addresses and keys.
Types of wallet
- Local or desktop wallet – a wallet that is being installed in a personal computer. Desktop wallet is a good choice if you want to get hold of your coins for long-term. With desktop wallets, you can generate as many addresses you need. Another good thing with desktop wallets, you can back-up your keys, and addresses. Popular cryptocurrencies usually implements their core wallet and downloadable in their site. An example of these are: Bitcoin Core, Bither, Litecoin Core, Dash Core, Jaxx, Ethereum Wallet, Exodus(a wallet for Bitcoin and Alt coin), Zcash client(only for linux). If PC was put offline for security and long-term storage, it is called a Cold Storage. Desktop wallet is a broad topic you can see more details here.
- Web wallet – is an online wallet service. There are many wallets and exchange services have launched. Maybe because of necessity and it is a good business. Web wallets are very convenient. However there are caveats in using web based wallets. It is convenient because the common process is easy but could take 1 – 3 days before you can deposit big amounts. You will just sign up, verify your information, submit IDs and sometimes you will have to take a selfie. Common process in some exchange and wallet service is, they divided verification process into tiers. Every tier has its limitation. For example, Tier1 (validate your name and address, limit is $500 deposit and $300 withdraw) and so on. This is a good choice for people always on the go and frequently transact with cryptocurrencies. The risk in web based wallets are: you are not holding a private key to your wallet which is supposed to be on your custody. The wallet service company is keeping it for you. If the wallet service company you signed up to is compromised, hackers may get all your money and crypto coins. Check this example of web based crypto wallet that was hacked. Some of these services are: BitGo, Green Address, Coinbase, BTC.com, myetherwallet and many more.
- Mobile wallet – are wallets installed in mobile phones. Most web and desktop wallets has mobile app counter parts. The risk on keeping mobile wallet is, if for example, you lost your mobile phone, all your money or crypto coins will be gone.
- Hardware wallet – hardware wallets are special device that holds your keys. It is immune to malware that steal from software wallets. The risk of this kind of device is the compromised while it is in production. Some example of this are: Trezor(recommended), Pi wallet, keep key and Ledger. Also called a Cold Storage.
- Paper wallet – is printed information of your Desktop wallet or generated wallet. It is like a check. It contains: QR code, private key, and your wallet address. Most people who holds a big value of crypto currency uses this method and keeps it in a vault. You can print many copy as you want but make sure you don’t lose it and you have a backup with its word seed and pass phrase if you have enabled it when generating the wallet address. There are web services that will allow you to print nice paper wallet like bitaddress.org.
How to get a wallet?
Getting web wallet – You can get web wallet by signing up to any digital currency wallet services like: coinbase.com, coins.ph, bitpanda.com, btc.com and many more. In this example I used coinbase.com which works best for U.S. based people:
Go to https://www.coinbase.com then click signup and fill in the form.
A verification ling will be sent to your email. Verify your email by logging in to your email account. In your inbox, you should see an email from coinbase.com. Open that email then click the verify link.
After verification, you will be redirected here:
Click next then you should verify your phone. You can skip this but it is recommended that you do the whole process:
After phone verification, you will be asked to input your payment method.
You can choose from Bank Account and Debit/Credit options. In my instance, I chose Credit/Debit because it is convenient for me. After successfully adding payment method, you can now click the Buy/Sell menu.
From here, you can now buy your preferred cryptocurrency. Indicate the require information then click Buy button.
Getting desktop wallet