If you want to choose the best crypto wallet in Canada, it’s good to learn about how a wallet works and what to look for. This will help you make a smart choice and keep your assets secure.
A crypto wallet is where you can access your cryptocurrencies, of which Coinberry has several available. To access your wallet, you should have your private keys or login. This way, you’re the only one who has access to your wallet and you can keep your crypto assets and funds secure.
If you want to invest in crypto, you should have a crypto wallet. This way, you can send, receive, buy, and store cryptocurrencies.
More accurately though, you can’t physically store cryptocurrencies in the wallet. What the wallet does is it lets you access your digital assets in the blockchain network. The wallet stores the keys and provides the digital signatures for transactions to happen.
In other words, a crypto wallet is all about access and connection. It connects you to the blockchain network where the digital assets actually live. Through a crypto wallet, you can buy, sell, or send crypto.
To better understand how crypto wallets work, let’s talk about the different types of wallets and how they let you buy and send crypto.
The two main types of crypto wallets are:
Let’s explore how they work and their pros and cons.
Here, you access your cryptocurrencies through a website or mobile app. Your private keys are stored and encrypted in their database. Because your private keys live online, hackers can also access those by exploiting the app’s security vulnerabilities. This is why you have to choose a company or platform that prioritizes security so that your account information and assets are protected.
Hot wallets are ideal for beginners. They can just sign up, add funds, and start buying some crypto. These hot wallets are also simple and convenient to use. Anytime, investors can access their cryptocurrencies and quickly see their balance and make transactions.
For your quick reference, here are the features of hot wallets:
On the other hand, cold wallets are kept offline. You store your private keys on a physical location or device instead of having the keys live and accessible online.
Examples of cold wallets are:
Because you store your private keys in a physical location, hackers can’t access them. Online attacks are impossible and other people can’t make the transaction (you have to push a button on the device to sign the transaction).
Although cold wallets seem to be more secure, you might lose the paper or hardware wallet. You’ll also lose access to your private keys and cryptocurrencies. In addition, setting up a cold wallet might require some knowledge of the blockchain. A cold wallet also requires setup and some upfront cost (you have to buy the device).
For your quick reference, here are the features of cold wallets:
If you’ll store a huge amount of crypto for long term, use a cold wallet. But if you regularly buy and sell crypto, use a hot wallet (buy and sell crypto through a mobile app for convenience). Hot wallets are ideal for quick transactions. They’re also beginner friendly and allow quick access.
For better security and peace of mind, many investors choose a cold wallet because online attacks are impossible here. But for simplicity and convenience, they prefer a hot wallet instead where they can quickly access their assets through an app and simple online login.
You can use both where:
Some investors store a huge percentage of their crypto assets through a cold wallet and they use the remaining assets for regular buy and sell. This is to balance safety (most of their assets can’t be accessed online) and convenience (they still use some of the assets for regular trades).
To keep your cold wallet secure, you just have to protect the device and make sure you won’t lose it. On the other hand, keeping your hot wallet safe often requires the following:
The goal is to ensure that you’re the only one who can log in to your account and that the platform you use has enterprise-level security.
It also helps to “spread the risk” so you can avoid major financial losses. You can both have a cold wallet and a hot wallet (e.g. crypto trading platform) so your assets don’t stay in one place. You can also try to start small (investing only 50 to 100 CAD at the start) and as you get more comfortable, you add more funds and buy more crypto.
Once you start your crypto investing journey with Coinberry, it helps to keep yourself up to date with the best security practices to protect your account and assets. This also applies to protecting your other assets such as money in your bank and stocks.