Wallets

Everything you need to know about wallets

When you purchase through Easy Crypto we create your cryptocurrency wallets for you. We’re the only end-to-end service that can generate your wallets, taking all the hassle out of buying Bitcoin and other cryptocurrencies.

But for anyone who is buying, spending or holding cryptocurrencies, it’s good to learn a bit about wallets and how they work. If nothing else, it makes you sound smarter at BBQs.

What is a wallet?

A wallet is a secure way to handle your cryptocurrency. It doesn’t really “hold” your money (like a physical wallet does) instead it holds special keys that allow you to spend the cryptocurrency that you own. Each cryptocurrency that you own has two parts, an “address” which is publicly known and a “private key” which only you can see.

The address is where you send your cryptocurrency (or “coins”) to.* The private key is what allows you to make payments from that address. Anyone who has access to your private key has access to your coins.

This is true even if you have disclosed only your private key and not your address, as the address can be figured out using the private key. So be very careful with your private key and never disclose it to any person, software or website unless you completely trust them.

Hot or Cold?

The first thing to know about cryptocurrency wallets is that they come in two types: ‘hot’ or ‘cold’.  A hot wallet is one that is connected to the internet, a cold wallet is offline. Cold wallets are more secure and because of this they are better suited for large amounts of coins or long-term holding. Hot wallets are used when you want to transact or trade your coins, as they are more accessible.

To be able to spend coins that are in a cold wallet (like your Easy Crypto Portfolio) you need to first move them to a hot wallet – see our instruction page for more.

What wallet is right for me?

There are lots of different wallets you can chose from, with different features and benefits. In the sections below we talk you through different options available and their pros and cons.

Hardware Wallets

Hardware wallets are physical devices that connect to your computer via USB. When they’re connected to your computer you can transfer funds off them, but when they’re disconnected your funds are completely secure.

But what about if you lose your hardware wallet? A good hardware wallet has something called a “seed” that allows you to reinstall your wallet on to any new device. Remember, the wallet doesn’t hold your cryptocurrency, it just holds the keys to the addresses where your currency is. A seed is typically a 24 word phrase, from which it is possible to regenerate all the addresses (and corresponding private keys) that were on your original hardware wallet.

If you want to know more about how this crazy black magic works, read up on heuristically determined addresses (and yes, it is as complicated as it sounds!). And of course, to be able to reinstall a wallet from its seed you will need to be able to keep that 24 word phrase somewhere secure!

Trezor – can hold Bitcoin, Litecoin, Dash and ZCash

Ledger Nano S – can hold Bitcoin, Ethereum, Ripple, Litecoin, Dash, ZCash and others

Security: High   Accessibility: Medium

You can buy hardware wallets in NZ from Coinsure.

Desktop Wallets

A desktop wallet is software that you download and run on a laptop or computer.  Desktop wallets connect to the internet so that you can spend directly from the wallet, but they can also be taken offline for added security.

Electrum – Bitcoin only wallet. Similar to a hardware wallet, your Electrum addresses can always be regenerated if you have your seed phrase.

Jaxx – can hold Bitcoin, Ethereum, Litecoin, Dash, ZCash and others

Exodus – can hold Bitcoin, Ethereum, Litecoin, Dash and others

Security: High  Accessibility: Medium

Mobile Wallets

Downloadable as an app on your phone, mobile wallets are an easy and convenient way to access your cryptocurrencies. But, like any wallet that you carry around in your pocket, you wouldn’t want to store large amounts in there. It’s safest just to use mobile wallets for storing a moderate amount of coins, or those you want to use to purchase or trade.

Most mobile wallets will store your private key for you. While that can be convenient (as you don’t need to worry about losing it or accidentally exposing it), it means that the wallet (and not you) is in control of your currency. So, be sure you’re happy to trust the mobile wallet with any currency you store there.

Jaxx – available on IOS and Google Play. Use this wallet for Bitcoin, Ethereum, Litecoin, Dash, ZCash and others

Coinomi – Google Play. You can use this wallet for everything Easy Crypto sells, and more

Security: Medium   Accessibility: High

Paper Wallets

Cryptocurrency doesn’t have to be purely digital either, once you have your address and private key you can go old school and print it out – what is known as a “paper wallet”. Paper wallets can be generated online complete with QR codes which make it easy to import to a mobile wallet, you just need to scan the QR code with your app. This is another form of cold storage, as it’s definitely not connected to the internet (and just don’t show it on TV!).

If you print a copy of the details inside your Easy Crypto Portfolio (make sure you include the private keys), you will have a “paper wallet” that you can store somewhere secure like in a safe.

Security: High   Accessibility: Low (need to import in to a hot wallet to spend)

But why stop at just one?

Remember, your wallets don’t actually hold your cryptos, they just hold the addresses and private keys that allow you to move or spend your cryptocurrency. So there’s no need to have just one wallet, you can keep those addresses and private keys in multiple different wallets.

As long as you use fully secure wallets, the safest option is to keep each address in more than one type of wallet. This will mean you’re protected against worst case scenarios such as a hard-drive failure, a house fire, or accidentally throwing them out!

 

*Note: Some addresses become invalid after a transaction has been sent from them. Make sure that you know that your address is valid before you send cryptocurrencies to an existing address that you hold.

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