7 Key Things to Consider Before Choosing a Crypto Wallet

If you own any cryptocurrency and want to keep it safe, you will need to find yourself a crypto wallet. Cryptocurrency wallets hide your private keys and keep your funds secure, but there are hundreds of different options on the market now, many of which differ in many ways.

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So, what are the important things you should consider before choosing the right crypto wallet for you? Let’s find out below.

1. Software vs Hardware Wallets

There are two main types of crypto wallets: software and hardware wallets. Software wallets are completely virtual, while hardware wallets are physical devices. To use a software wallet, you need to be connected to the internet, as this is where your private keys are stored. However, hardware wallets store your private keys offline in what is known as “cold storage”. So which one is better?

When it comes to security, hardware wallets almost always take the cake. This is because storing your private keys offline means that cyber criminals cannot access your wallet via the internet and therefore cannot access it remotely. This type of wallet is also impervious to system malfunctions, server crashes, and other related technical errors, which could result in you losing your private keys.

Therefore, it is important to note that a software wallet cannot securely store your private keys in this way. But many software wallets still use multiple levels of security and backup methods to keep your crypto safe. On top of this, it is much cheaper to use a software wallet than a hardware wallet.

The upfront cost of purchasing a hardware wallet often exceeds a couple hundred dollars, and some newer models will cost you even more. So, if you want to keep your crypto safe on a budget, you can find a number of reputable software wallets out there.

2. Security Features

If you are interested in using a software wallet, a password is the basic level of security everyone should be looking at. But when it comes to your crypto funds, a password alone is not good enough. Therefore, look out for additional security features, such as two-factor authentication and multi-signature.

These may complicate your experience a bit but make sure that no one can access your account or do any transaction with only your password.

It is also important that your chosen software wallet has a backup feature. This often comes in the form of a seed phrase, which you can use to recover your funds if you forget your login information or experience a technical error.

If you are looking for a hardware wallet, try to find one that has a CC EAL5+ certified Secure Element chip. This is where your private keys are stored and is the same chip used in passports and credit cards. A recovery seed phrase is also essential, as this will give you access to your private keys and your funds if you lose or break your wallet.

3. Open Vs Closed Source Crypto Wallets

Many popular and reputable hardware and software wallets are open source. This means that anyone can view their software or firmware.

Because of this, users and developers alike can find and report or fix flaws, making the wallet itself more secure overall. After all, it’s better to have a wallet that keeps getting better than one that stays the same for a long time.

While many closed source crypto wallets work well for most people, it is worth considering this factor before deciding which one is best for you.

4. Crypto Wallet Fees

Unlike the wallets you use to store your cash and credit cards, crypto wallets are generally not free to use. You may incur fees for depositing and withdrawing funds, and there are often fees for buying or betting crypto. These fees vary depending on the wallet you’re using, but they can be a bit expensive.

So, before signing up for and using any wallet, make sure you are aware of the fees involved first. Most wallets have a fee schedule on their main website, so check them out to understand what kind of fees you’ll be getting.

5. Supported Coins

This is another important factor that you should consider before selecting a crypto wallet. Unfortunately, not all wallets support all coins, and some are designed to hold only one coin. Take Mycelium for example. This reliable software wallet has some great features but only supports bitcoin.

Sometimes, that’s a good thing. Wallets that focus on just one coin sometimes offer perks and integrations related to that specific crypto. For this reason, wallets like Mycelium have become quite popular.