More on wallets
There is more than just the full and light wallets you can install on your device (desktop, mobile, tablet).
Online wallets
Some websites offer to store your cryptocoins online. This gives you flexibility, among other things. Some services only provide you with a (multicurrency) wallet, others also provide:
- conversion from one cryptocurrency to another
- fiat/credit card deposit and withdraw
- and so on
Downside of online wallets
One thing you should be well aware of is, that you are not in full control of your coins. If the service stops to exist or the website gets hacked, you could lose all your money. If it is not a well trusted party like you thought it was, they may scam you out of your money in other ways. Always check the website, search for reviews. Don't fall for just youtubers with a referral link.
Fees and deposit/withdraw limits
Check the fees, some service charge extremely high fees for withdrawal for example. Also check the deposit/withdraw limits. I once was dumb enough to store the small amount of Bitcoins I had (less than 1 BTC) in an online wallet system that (still) has a withdraw limit higher than my small amount. At that time I had no way to transfer my money to another wallet.
Paper wallet
Most cryptocurrencies also have a paper wallet available. This is a piece of paper, with a private key and one or more generated receive addresses, you print out on your own printer. This is especially helpful when you don't want to have your wallet in a digital format and you want to hold on to your coins for a long time. The paper is the hard copy of your wallet. You have to keep this paper (and maybe a copy of it) in a safe place. A place where it can not be damaged by fire or anything else. Losing your paper wallet means losing your money. There is no way to retrieve it.
Sending money to your paper wallet
Sending money to your paper wallet works the same way as with the digital wallet. Supply the system or person, the money is coming from, with a generated receive address of your paper wallet and you are good to go. Never ever share your private key with someone.
Withdrawing money from your paper wallet
Paper wallets should be used like a piggy bank. You or anyone else can deposit small or large amounts multiple times, but when you want to use your money, you have to take it all out. Withdrawing money from a paper wallet always includes importing your wallet into a third party system. You have to share sensitive information about your paper wallet. If you take out all the money, the information sharing is not a problem because the wallet will be empty afterwards.
Hardware wallets
These are the safest wallets. They come in different flavors, most of them look like a USB-stick. To withdraw money from your hardware wallet, the device will have to be attached to your computer. Your private key is stored in the hardware wallet. No one can touch your money unless they steal your hardware wallet.
Always buy a hardware wallet directly from a trusted merchant. Never use a hardware wallet that doesn't come as a sealed package. Some people have already been scammed out of their cryptocoins by using a hardware wallet they bought secondhand.
Exchanges
When you start trading cryptocurrencies, you will have some of your coins in the online wallet of the Exchange provider. The general advise is to not leave your coins in such an account, longer than necessary. More on exchanges and trading later on.
Next post will be about 'What to do with your cryptocoins'.
