What do I need a wallet for? Wallets are a way to store your cryptocurrency earnings securely. Since cryptocurrency is not in a physical form (paper or coin) you can’t lock it away in the safe under your bed. But you can lock it away in a digital sort of safe called a “wallet”. There are different types of wallets with varying levels of convenience and security.
Wallets can hold from one to many different cryptocurrencies. If you focus your faucet collection, mining or trading, to one particular cryptocurrency you may benefit from a wallet specific to that currency. If you like to dabble in multiple currencies you can try a wallet that accepts multiple cryptocurrencies or get a separate wallet for each currency.
A little technical explanation of how cryptocurrency wallets work. The wallet creates a unique set of keys for you, a public key and a private key. The keys are what point to the type and amount of a particular cryptocurrency you have. The public key is the one you send to faucets so they know where to send the free satoshi. The private key is a secret key that you never give out to anyone. The private key is used by your wallet to ensure you are authorized to make transactions.
Depending on how the wallet is connected to the internet you may hear about a wallet being hot or cold. A hot wallet is one that is either on the internet or is actively linked to the internet. A cold wallet is one that is not linked to the internet, like a hardware wallet or paper wallet.
The simplest way to store you cryptocurrency keys is to use an online wallet. Online wallets are hot wallets and are extremely convenient. You can access them from any computer or device connected to the internet. They give you access to whatever cryptocurrency you may need for a particular situation whether you’re making a purchase with them, trading them for other currencies or tipping someone for something they’ve done. As an added security measure, many online wallets have added a security code or 2 factor authentication that you can entered in addition to your username and password. Take advantage of these to protect yourself.
Easily accessible from any computer or mobile device.
Easy to setup.
Can be free and transaction fee free
As with most things online, it’s not completely secure.
Not recommended for storing large amounts of valuable cryptocurrency.
Software and Desktop wallets are hot wallets downloaded and setup on your computer. These wallets can be more secured than the online wallets but only as long as you have proper anti-virus and eliminate potentially dangerous software downloads. With the wallet being on your computer you do have more control over your public/private key.
Fairly easy to download and install
Control over your keys
Some have Online aspect as well
Not completely secure
Wallet can only be accessed on the installed computer
Hardware wallets are independent devices similar to a usb flash drive that stores your public and private keys keeping your cryptocurrency safe. If you are serious about cryptocurrency then a hardware wallet is the direction you should go. Hardware wallets do not accept all cryptocurrencies. While they are actively working to add more you can expect a hardware wallet to hold about a dozen of the more common cryptocurrencies.
Hardware Wallet Coin Support
Most secure option
Immune to computer virus’
Supported by Windows, Mac and Linux
Must have handy to make transaction
Can be physically stolen
Mobile Wallets are apps that run on your mobile device be it iPhone, Android or other. The main purpose of the mobile wallet is convenience. Be sure, if it is available on the mobile wallet you use, to set a security pin that only you know. Some mobile wallets can tie into exchanges where you can buy and trade coins.
Simple to use
Don’t lose your device!
So between Faucets and Wallets you are well on your way to collecting cryptocurrency! But there must be an easier way. A way to get cryptocurrency without constantly clicking on a links and buttons in a faucet. Yes there is! See our article: What’s the easiest way to get cryptocurrency? on how to get started.