Crypto Wallets for Dummies

One of the first things that I was asked when I enter the realm of cryptocurrency is : "Do you have a wallet?", and I was like "uhm..duh?! Of course I do. I'm not a caveman. I like have two of them, one for money and one for cards". And if only I could go back in time, I'll give that proud mouth of mine a smack. As it turns out, the wallet I have been asked about is a crypto wallet. So, what on earth is a crypto wallet?

Crypto Wallet

I will not be too technical for this, since I am not, but I will just try to define crypto wallet as I understand it, which is simply : a storage where you store your cryptocurrency, in my case, bitcoin cash.

You can simply think of it as a normal wallet, but instead of bills, you have cryptocurrencies inside, instead of in your pocket it is on a computer, on the cloud, or on a flash disk.

That seems pretty basic enough, right? But in actuality, crypto wallet is neither a place nor a container that holds your cryptocurrencies. Your cryptocurrencies are stored in the blockchain, they never left the blockchain. A crypto wallet just gives you a set of information that will be used to access your cryptocurrencies on the blockchain. The set of information may include, private and public keys and the addresses on the blockchain where your cryptocurrencies are stored.

To visualize this concept let us look at it at a physical level. I live in a building complex and with that I am provided with a unit number, a key to the unit's door and a key to the building's main door. Now let us say that the building is the blockchain. To enter the building you need the building's main door key, or the public key. Many others have that same key because many others live on that building, same as in the blockchain, a lot of users are in there. Next you have the address or the unit number. Many people may know the unit number or the address but they will not be able to enter because they do not have unit's key or the private key. Only I have that key.

It seems pretty simple right? But there's more. Crypto wallets are classified as either hot or cold. And again, really? What on earth are those?

Hot Wallet

As I gathered hot wallets are cloud based applications or service that, of course needs internet connection to be accessed. So if you do not have an internet connection you will not be able to access your funds.

Hot wallets are further classified into three types:

• web wallet

• desktop wallet

• mobile wallet

A web wallet is a crypto wallet that is accessed only through a browser. All you need to do is check that you have an internet connection and fire up your favorite browser, be it chrome, brave, firefox or safari and visit the address of your wallet provider. I think the wallet used for read.cash is some form of web wallet.

A desktop wallet on the other hand resides in an application that is installed on your computer. You have to download and install the application so you can access your funds.

A mobile wallet, I think is the most convenient type of wallet cause it is accessible on your mobile phone, you just have to install an app and you're good to go.

Cold Wallet

A cold wallet is often a physical device or material that holds all the information you need to access your funds. And all of these information are safely stored away from the internet. Cold wallets could also be either a hardware wallet or a paper wallet. Okay, paper wallet? A paper wallet is of course a piece of paper where all the information are printed on it. Often times these information come in QR codes. A hardware wallet is an offline device where the information are stored, often times they look like hi-tech USB drives.

Hot or Cold

So which one to use? Well it depends to how you will utilize your funds. If you are planning to just hodl your funds for a long period of time you may want to use a cold wallet because it is virtually more secure and is not prone to hacking. Although, hardware wallets may seem a bit costly at first. I wouldn't want to use a paper wallet myself, that could easily be lost, stolen, or worse, burnt.

If you are going to access your funds from time to time, or you are going to use them for trading, it seems more logical to use hot wallet because you can access your funds and do a transaction any time, well as long as you are connected to the internet.

Crypto Wallets I Tried

Since I'm a beginner in cryptocurrencies, I didn't know what wallet I should use at first to store my hard earned bitcoin cash. So I have asked around and tried a few wallets myself although all of those are mobile wallets.

Coins.ph

First one I tried was coins.ph. I still use this one because it's a wallet that could convert BCH into our fiat currency. I found it pretty useful since as soon as I got my BCH on it, I could use them for many purposes, pay bills, buy load or game credits. All I have to do is to convert the BCH I have to PHP, our local fiat. The only thing I can comment on this one is : it's too slow!

I don't mean the interface or loading times, I mean the transactions take so much time. For instance, if I send the bitcoin cash I have on read.cash to coins.ph, it will take several hours to be completed. And, I still don't know why that is the case. May have something to with confirmations, or maybe corruption. LOL

And as they claim, coins.ph is also regulated by the Central bank of the Philippines (BSP), so rest assured that the transactions here are legal and are following a certain standard.

Bitcoin.com Wallet

The next one I tried and downloaded was bitcoin.com wallet. This is by far the most user-friendly and easiest wallet to use. By default upon your registration and successfully login, a wallet is created for you. If you want to create another wallet or add another you just have to click add and choose what cryptocurrency you want to store there, you just choose BCH click next, done and you are done. BTC and BCH wallet can be created from it.

Abra

I tried this one because I was looking for a way to convert my BCH earnings into US dollars instead of our Philippine peso. That way, you could avoid the volatile nature of BCH and keep the dollar value of your earnings. The only thing is, every transaction in this wallet has a minimum of $5. And if you want to withdraw your dollar savings, the minimum withdrawal is at least $5000, or if you want to withdraw them in PHP, the minimum withdrawal amount is Php500.

Nexo

Tried Nexo for a simple reason. Interest. Just like when you put your money in the bank, it will earn you a percentage of the money you entrusted to them. I found that interesting and of course I tried it. Although you need to complete the advanced verification before you can start earning from interests.

I have also tried blockchain's wallet and zapit wallet. They are just pretty much offering the same services as the others.

Conclusion

In the end you are entrusting your funds into another entity rather than yourself so just like saving in a normal bank, you must choose a wallet than you are comfortable with. And just like in the real banks, it is better not to rely in a single one among them.

Hey there!

Thank you for reading this. I am just sharing what I am learning in every step of the way. So if you are like me, grasping for the knowledge of cryptocurrencies, let us share journey and learn together.

Have any thoughts? I would love to hear from you! Drop by on the comment section and let's get to talking.

As always, cheers!!!

Sources:

Lead Image : https://www.computerworld.com/article/3389678/whats-a-crypto-wallet-and-does-it-manage-digital-currency.html

https://www.investopedia.com/terms/h/hot-wallet.asp

https://successresources.com/keeping-bitcoins-safe-hot-wallets-vs-cold-wallets/

Cryptocurrency Wallets Explained | What are Crypto Wallets?