CRYPTO CASHBACK

Have Questions about Cryptocurrency?

The Basics of Digital Wallets for Cryptocurrency and Crypto Exchanges

What is a Crypto or Digital Wallet?

A digital wallet for cryptocurrency is a software application or hardware device that stores the public and private keys needed to interact with blockchain networks. It allows users to securely send, receive, and store digital assets like Bitcoin, Litecoin, Ethereum, and other cryptocurrencies.

While it’s called a “wallet,” your cryptocurrencies aren't actually stored in it. Instead, the wallet holds the keys that prove ownership of the digital coins, which are stored on the blockchain. And, each crypto wallet works through two main components:

• Public Key: This is your wallet address, much like a bank account number. You can share this key with others to receive cryptocurrency.

• Private Key: This is the password that lets you access your funds and authorize transactions. Never share your private key, as anyone with access to it can control your crypto assets.

With the right private key, you can unlock and transfer the funds associated with that address.

How Does a Crypto Wallet Work?

Crypto wallets are typically identified across two main differences: how accessible they are and who controls the keys.

Accessibility: Hot vs. Cold Wallets

• Hot Wallets: These are connected to the internet and usually accessed via a mobile app, desktop apps or web browsers. They are great for quick transactions and are generally secure, but enabling two-factor authentication is recommended for added protection.

• Cold Wallets: Cold wallets are offline, hardware-based options, providing a much higher level of security. They are ideal for holding crypto long-term but are less convenient for daily transactions.

Key Control: Custodial vs. Self-Custodial (or Non-Custodial) Wallets

• Custodial Wallets: With these wallets, a trusted third-party (like an exchange) holds and manages the private keys. Since you do not have to worry about key storage, this makes trading and transacting easier, which is why many beginners start here. However, you are relying on someone else to secure your keys, so make sure you are choosing a reputable party to do this.

• Self-Custodial Wallets: As indicated by the name, these wallets give users full control of their private keys. This means that you as the user, and only you, have access to the private keys and assets. As the user, you are in total control of your crypto. That also means your crypto exchange or processor does NOT have access to your keys or funds, so make sure to securely backup your private keys. While self-custodial wallets offer more privacy and control, the user also assumes full responsibility for their private keys and, if lost, the funds tied to their wallet will be irretrievable.

Beginners usually start with a Custodial Hot Wallet that is integrated with their crypto exchange, making it easy to manage and trade. As they get more comfortable, many then move some funds into a Self-Custodial Wallet to gain more control. Later, as their crypto savings grow, they might invest in a Cold Wallet for safe, long-term storage of their high-valued crypto.

How to Choose the Best Crypto Wallet for Me?

When choosing a crypto wallet, consider the following factors:

• Security: Does the wallet provide 2-factor authentication (2FA), backup options, or cold storage features?

• Ease of Use: Is the interface user-friendly? Can you easily send and receive crypto?

• Coin Support: Make sure the wallet supports the cryptocurrencies you hold or plan to acquire.

• Backup Options: Look for wallets with robust backup and recovery options, in case your device is lost or compromised.

• Extra Features: Some wallets offer built-in exchanges, or advanced features like staking, or dApp support.

Top Crypto Wallets of 2024

Here’s a list of some of the leading cryptocurrency wallets for beginners based on security, usability, and features:

• Trust Wallet (Hot Wallet) - A highly secure mobile wallet that supports a wide range of cryptocurrencies and NFTs and is partnered with the Binance.US exchange (see below).

• Coinbase Wallet (Hot Wallet) - Provides easy integration with the Coinbase exchange (see below) and allows users to hold their private keys.

• Crypto.com DeFi Wallet (Hot Wallet) - A beginner-friendly wallet that is integrated into Crypto.com exchange and offers staking and fully-controlled private keys

• BitPay Wallet (Hot Wallet) - A multi-chain wallet that allows users to take full control of their crypto, making it easy to manage, buy, spend, and swap their coins securely.

• Exodus (Hot Wallet) - User-friendly with a built-in exchange, making it a great choice for beginners.

• MetaMask (Hot Wallet) - A popular web and mobile wallet, primarily used for Ethereum-based tokens and decentralized applications (dApps).

• Atomic Wallet (Hot Wallet) - Offers multi-currency support and staking options for various coins with a built-in exchange.

• Mycelium (Hot Wallet) - More for advanced users, it is known for its advanced privacy features and support for Bitcoin cold storage.

• Ledger Nano X (Cold/Hardware Wallet) - A top-tier hardware wallet offering robust security and Bluetooth functionality for mobile access.

• Trezor Model T (Cold/Hardware Wallet) - Offers top-notch security features and supports a wide range of cryptocurrencies.

What Are Cryptocurrency Exchanges?

Cryptocurrency exchanges are online platforms hosted by companies or other entities that make it easy to buy and sell the currencies you want with low fees and strong security features.

Cryptocurrency exchanges work similarly to a broker, providing tools to trade, buy, and sell crypto like Bitcoin, Litecoin, or Dogecoin.

It’s important to use a reputable and regulated cryptocurrency exchange for your own safety.

Also, note that fees can whittle away at your finances, so make sure you understand how each exchange and blockchain charge you for transactions.

Which Crypto Exchange should I Use?

If you are new to Crypto, here are a few top exchanges that offer user-friendly interfaces, solid security, good customer support, can be managed on your mobile phone (iOS or Android) or via your other web-enabled platforms (desktop, tablet, etc.) and also support a wide selection of cryptocurrencies:

Coinbase is often recommended for complete beginners because of its simplicity and educational resources.

• They support a wide range of cryptocurrencies, offer easy-to-navigate tools, and provide their own insured custodial wallets.

• They are very beginner-friendly with good educational resources, though they have slightly higher fees, especially on small trades.

Binance.US offers an affordable and accessible option for U.S.-based users.

• The U.S. version offers a good selection of cryptocurrencies with a suite of advanced trading tools.  They partner with Trust Wallet as their official wallet but can support plenty of others.

• Their interface is very Beginner-friendly with lower fees.

Kraken is known for its security and solid reputation among both new and experienced users.

• They offer a wide range of crypto assets, margin trading for advanced users, and staking options for certain assets.

• They have an excellent security track record, low fees, and a very user-friendly experience for beginners.  However, they support fewer crypto options compared to Coinbase or Binance and may seem complex to some very new users.

Does BitPay have a Digital Wallet and How does BitPay work?

BitPay is a cryptocurrency payment service provider that supports the transfer of your Crypto Cashback to your digital wallet. And, while you can use many other digital wallets, BitPay does provide their own BitPay Wallet, a self-custodial crypto wallet. It allows users to buy, store, swap, send/receive, sell, and spend cryptocurrency seamlessly, while engaging with merchants eager to accept crypto payments. As with other self-custodial wallets, BitPay does not have access to your keys or funds, so make sure to securely back up your private keys.

Using BitPay’s wallet or many of the other supported crypto digital wallets, you can utilize BitPay’s Bill Pay service to pay off practically any bill with cryptocurrencies, including BTC, LTC, ETH, DOGE…credit cards, student loans, mortgages, utilities, car payments! In fact, you can also donate to various supported charities, including American Red Cross, American Cancer Society, GiveWell, Thorn and more.

Also, BitPay Travel allows crypto users to pay for flights, hotels, rental cars, and activities with their cryptocurrency. Book your travel at great prices and pay straight from your cryptocurrency wallet.