Crypto Wallets don't work the way a typical wallet does, where they store currencies. All that a wallet does is store private and public keys (long cryptographic sequences like x2id2k1k30cod..) with various blockchains (decentralized ledgers) these wallets let you monitor your balance, send money and conduct other operations. When somebody sends you a digital currency or cryptocurrency they are signalling to the blockchain of that currency that these funds are no longer mine and belong to you. There is never a real exchange of real coins, just a change to the ledger that says what assets belong where.

Cryptocurrencies are digital decentralized assets or utilities. Since the boom in popularity in the last decade, more issues concerning cryptocurrencies have been occurring as well – how and where to store these digital funds and ensure their security?

Just like for keeping physical banknotes, there are wallets for digital assets as well – so-called crypto wallets are created to access and store one’s crypto funds, authorize transactions, and secure the funds.

There are three types of wallets – 

1. Software (accessible online or web, mobile apps)

Software wallets are more suited for those who perform more transactions – using software on one’s phone or computer offers higher mobility of the assets. 

2. Hardware (physical devices, that are not connected to internet)

Hardware wallets, that look like flash drives, are more secure because they are not connected to the internet so much less accessible for the third-parties – it is a better choice in a long-term perspective for the patient investors and Hodlrs. 

3. Paper (printed out QR codes or a sequence of letters and numbers).

And lastly, paper wallets, are physical printed out QR codes, that are the least flexible type as they are easily damage and only allow to move the whole amount of one’s funds.

Crypto wallet is a service that creates the link between the person, using cryptocurrencies, and the blockchain. It is both a “vault” for one to store the cryptocurrencies as well as a gateway to perform transactions. Depending on the wallet, they might have integrated trading platform, or only storing feature. There are specialized wallets that are only meant to support one particular currency, as well as different kinds of cryptocurrencies – Bitcoin, Ethereum, Ripple, Litecoin, etc.

There are different types of mechanisms as of how the crypto wallets operate – hot wallets are designed for those willing to operate with their cryptocurrencies more intensively and are connected to the internet. Cold wallets, also referred to as “cold storage” are basically the vaults best suited to store one’s crypto and are more suitable for long-term investors.

Crypto wallets contain several essential safety mechanisms: so-called keys that allow authorization of certain procedures – just like in online banking: usage of certain disclosed codes to ensure the safety of the funds. In the case of crypto wallets there are two types of keys: public and private. The main difference between them is the purpose of the procedures they authorize.

So the wallet generates multiple public keys that are meant to perform a safe and accurate transaction. Once a user decides to send or request an amount of crypto currency, public key generates a block chain address, that, once sent to another crypto wallet user, grants the smoothness of the transaction – the money never leaves the blockchain, it is just moved from wallet A to wallet B.

Then there are private keys – they are essential for the safety of the user’s funds. Private keys grant access to the most sensitive data and must be kept extremely attentively. As an integral part of the security mechanism, private key allows reaching the assets within the wallet, authorizing and granting transactions. Securing private key carefully, grants access to one’s funds smoothly even if the main device – a laptop or mobile phone is damaged or lost.

The most important part of keeping the crypto funds safe within these wallets, is to constantly creating back-ups, using encryption, choosing strong passwords, using safe locations, and keeping the login information safe.

Depending on one’s needs, there is different criterion in choosing the crypto wallet.

Our favourites are:

Software – MyEtherWallet, Coinbase, coinmama,Uphold, Blockchain, Coinomi, Electrum

Hardware – Trezor, Ledger

The Trezor hardware wallet is a car fob sized crypto wallet that can be used to take cryptos out of crypto exchanges or hot wallets so your cryptos stay safer. The Trezor wallet is one of the leading pieces of hardware to store cryptos offline. We highly recommend using either the trezor wallet or ledger to Hodl your cryptos. The only danger is loosing the piece of hardware but even then both the trazer wallet and ledger give you a passphrase you can use even if you lose the device.

What is the difference between Trezor vs Ledger?

The Ledger supports 26 cryptos vs 1400 cryptos on the Trezor wallet.

The Ledger Nano S costs $59 and the Trezor One costs $55.

The Ledger works with Windows, MacOS, Linux, iOS and Android. Whereas, the Trezor has the same except no iOS app.

You can compare all the different crypto wallets here.

The best xrp wallet depends on what your needs are, if you're looking to transact frequently then it makes sense to keep your xrp accessible in a software wallet like Exodus Wallet. If you're Hodling your xrp we recommend a hardware wallet like the Trezor or Ledger.

Coinbase is a fantastic crypto exchange but we wouldn't recommend storing your crypto in their hot wallet, it is insured but it's much less risky to take any crypto you're HODLing and storing it in a cold wallet. So yes Coinbase is safe, but safer still is using a cold storage wallet.