Published Aug 22, 2022
By Qredo Team
What to look for in a crypto wallet
Crypto wallets are the bank account of Web3.
All of the activity on protocols, exchanges, DAOs and elsewhere ultimately has to find somewhere to stop off safely once the day is done, and in crypto that is provided by the wallet infrastructure.
Crypto wallets consist of a public key, which is your address on the blockchain where other users can send funds, and a private key, which functions similarly to your bank PIN number or identification check and gives access to the assets in the wallet.
While the concept is relatively straightforward, the reality of the current crypto landscape is much more complex.
At this point, crypto wallets are split between custodial or non-custodial solutions, storing assets on exchanges, physical hardware solutions, and other methods of managing your assets.
Some of these allow for full control over your assets, while others outsource some of the security and privacy in exchange for ease of use.
Others, such as Qredo, manage to do it all.
But whatever way you want to get involved in crypto, you’re going to need your own crypto wallet.
What is a crypto wallet?
A crypto wallet is your DeFi bank account, the place to store, send and receive assets from one account to another.
However, not all crypto wallets are created equal.
There are those which offer complete security and privacy, those which offer easy access to the Web3 ecosystem, and a host of other solutions in between.
Here are some of the different types of crypto wallets:
Hardware crypto wallets
Hardware wallets are considered as one of the most secure forms of cryptoasset storage.
While they don’t come cheap, these custom-built devices offer a means of holding your assets in a system which is disconnected from the internet and therefore less vulnerable to online attacks.
This is considered to be a “cold wallet” – a crypto wallet which is unconnected to the broader network or blockchain.
Hardware wallets come in many different forms, but are most often used by those more concerned about privacy and security than day to day use, given the inconvenience involved.
Exchanges
Wallets held on centralized exchanges are not fully controlled by the user.
Exchanges maintain control over private keys and so have access to the funds held inside, and – as has been seen in multiple cases recently – firms can often claim control or ownership over such wallets in the event of bankruptcy.
The major benefit of wallets held on exchanges is of course the low cost, ease of use, and ability to seamlessly trade in and out of different assets.
These are the “hot wallets”, as the account is always connected to the network.
The downside? That without full control over your private key, you are always left vulnerable to the whims of a centralized party.
As we say at Qredo – #NotYourKeysNotYourCoins.
Desktop
Want to have more control over your assets without going the full hardware route?
There are numerous options available for desktop downloadable crypto wallets, which are stored on your device.
While this is more secure than an exchange, it remains on a device which is likely to be connected to the internet at some point, raising security risks.
Equivalent downloadable wallets are also available for mobile devices and operating systems.
Paper
Paper wallets are exactly what they sound like- a printed version of public or private keys, sometimes in the form of QR codes.
It’s hard in this day and age to disconnect totally from the internet, but this method of securing your crypto remains popular with many due to its simplicity and ease of use.
What crypto wallet to use?
With so many options it can be daunting when trying to choose which crypto wallet is the right one for your needs.
Factors to take into consideration:
Cost
Are you going to be using the wallet everyday? Can you justify the investment in an expensive hardware wallet, or are you more interested in getting into the game as quickly as possible?
Ease of use
This is one of the main differentiators between the various types of crypto wallet on offer.
Easy access to markets, the ability to trade at a moment's notice, and how simple it is to move assets between different chains are all worth considering.
Security
For many, this is the reason why it is worth taking a further step than storing assets on exchanges and moving towards more secure solutions.
The whole ethos of crypto is around returning control to the users. The less connected your crypto wallet is with exchanges or other vectors which could be used to access your wallet, the more secure your funds will be.
Integrations
Unless you are only planning to HODL Bitcoin, you will probably want to be able to store more than one cryptoasset in your crypto wallet.
This is primarily possible with advanced solutions such as Qredo, hardware wallets and exchanges.
Qredo Wallets and decentralized MPC
Qredo Wallets solve many of the trade-offs inherent in the options outlined above with crypto wallets by using our decentralized multi-party computation (MPC) encryption to give users full control over their assets without sacrificing access to the market or ease of use.
Qredo eliminates private key risk, replacing private keys with cryptographic secrets that are distributed between independent MPC nodes and removing the centralized point of attack and protecting against loss.
Ready to join us?
You can open a Qredo Wallet here and take control of your cryptoassets.