After Bitcoin was laying the ground for the cryptomarket growth, many projects launched their own networks and coins. The market matured very fast, in just few years. In my past blog posts i was talking about how to use metrics and aggregators to survey the market and get the information needed (Read them here: Part 1 and Part 2). But before going forward, i will talk about wallets, what are they, how many kinds of wallets are, and what kind of wallet is the best for you, according to your current needs. I will give you all the information that you need in order for you to make an informed decision. 

Let's start with few technical terms, i am sure you know most of them, but i will go through them, just in case you need it. 

Digital assets - any object represented digitally which carries some value (will have various forms: ether, in-game items, Gemini exchange used dollar token - GUSD). 

Cryptocurrency - any digital asset designated to provide a medium of exchange or value transfer, using cryptography to secure its properties. Can be both decentralised (BTC, ETH) or centralised (XRP). 

Blockchain - a structure designated to manage data as function of time. Enables the decentralisation of the network. 

Coin - mainly is used as a coloquial term, it can refer to one unit of an asset - like one Bitcoin.

Token - representation of a digital asset on a network, most of them adhere to standards and aim to provide value. Not only as a currency oriented asset, as we can program value now using smart contracts. 

At some moment in one of my posts i was explaining that a wallet is made of a private key and a public address. That was the case in 2009, when we were just starting. Now we use mainly HD wallets (Hierarchical Deterministic wallets). They are more advanced, user friendly, more safe, have beter UX and got better methods and measures in place to protect our assets. As opposed to the private key, they are using a Mnemonic Seed - a string of 12 or 24 random english words, which is more convenient to back up and can allow also the creation of multiple addresses using the same seed. These wallets can be used for bitcoin, but also for ethereum and ethereum based tokens (you probably heard about Metamask, myEtherwallet or MyCrypto.com).

In order to choose the right wallet, you need to know what options you may have. There are printed wallets - paper wallets that you can store safely (they are not HD wallets and can be used only for one address). There are software wallets (they can store data, connect to the network and are supported on the phone, pc, laptop etc.). And finally, the hardware wallets, they are unique physical devices and everything is done inside the device. 

There are different needs for different wallets:

1. Paper wallet - you make it by printing the private key and the public address. It is done offline, and the private key is never exposed to internet. It is not very practiccal as it is using paper and can be damaged, resulting in you losing everything that you may have deposited on that address. If you need to use it later, you need to import the paper wallet to a software wallet to send them. Most paper wallet users are long time holders, and they do not want to touch their balances for a long time. 

2. Software wallets - they are clients using an operating system connected to internet to send and receive cryptocurrency. Can operate on any medium and any device (PC, MAC, IOS, android, Linux etc.) Some software wallets support a single cryptocurrency (Neon for NEO), some suport multiple coins (Atomic wallet).  Ideally, if you use a software wallet, the private keys need to never leave your device (if the information is stored on the cloud or in the company servers, they are prone to hacking). 

If you look for a good wallet, there are some conditions that they need to meet:

- recommended by the community (not the 5-10 reviews, as they can be bought, check with reddit or steem like forums, where are plenty of cryptocurrency users);

- prompt you to back up your seed (if this didn't happen something is wrong);

- ideally, doesn't require a sign-up (this is a sign that your private keys are stored externally).

3. Hardware wallets - we talk about specialised physical devices storing private keys and with no external access to them. They are protected by a pin code (and if you get it wrong few times the whole content will be deleted. Wait a minute, you will say, how is this safe? They can be restored using a seed. All transactions are approved by physically pushing a button on the device, they are very secure, even if it can be a bit annoying and cumbersome to use. In order to steal the funds, the attacker need to psysically have the device and to know your password/pin. You can back up them using a mnemonic seed like for the software wallets, one seed only for all the coins supported by the wallet. To keep this seed safe is the main priority for any hardware wallet user, as a wallet can be stolen, destroyed or damaged, but you can always reinstall your addresses using the seed on any new compatible hardware wallet. 

Most popular choices are:

-Ledger Nano S - cheap price (around 60$), but recently some people complain about problems with the wallet. 

-Ledger Nano X - has bluetooth insted of cable, can be used with a phone, a bit more expensive (around 120$).

-Trezor Model T - bit more expensive (around 150$), it is a different company than Ledger.

In conclusion, the hardware wallet has a high level of security, average ease of use, medium to high cost, and it is recommended to be used for medium to long term light usage. The only risk can be due to the hardware vulnerabilities. The software wallet has medium level of security, it is very easy to use, free cost in the majority of cases, the main risk come from the hacking of your private keys from your computer or the company servers, as well as phishing and social engineering. The paper wallet cannot be hacked, but it is difficult to use as you need a software wallet to import it when you want to transfer cryptocurrency. It is also free to use, good for long term stashing with minimal use. The main risk come from the paper being destroyed (burn, ink smear, wet etc.)

As a beginner, it is better to start with a good software wallet. You may use paper wallet for various amount of less unknown cryptocurrency, in case you want to keep it long term. But the hardware wallet is superior to the paper wallet. My rule of thumb is that, if you play with more than 10.000 $, you need a hardware wallet. Be careful and safeguard the seed to keep your funds secure. 

I hope you enjoyed this!

G.

My crypto-related links  (check ratings - 1 to 5 stars based on my personal experience)

Games to gain crypto

***** League of Kingdoms - link here: similar with Heroes of Might and Magic (worldwide - paying in DAI)

Exchanges

***** Binance( good for staking/savings ) - link here

***** Kucoin( good for staking/savings ) - link here

***** Coinbase( ideal for beginners )- link here  

Investments

**** BlockFi (decent interest rates, but less choices than Celsius) - link here

***** Celsius.network (good rates of interests and monthly codes for free crypto, 1235256530 => my referral for $10 bonus  ) - link here

**** Coinbundle (investing in crypto bundles) - link here  

**** Stakecube (staking, masternodes and very easy to claim faucets for 28 coins/tokens) - link here

Wallets for multiple cryptocurrencies

***** Coinpot - link here (microwallet for all Moon faucets, Bitfun and Bonusbitcoin)

***** Atomic wallet - link here (microwallet for Publish0x DAI, BAT and Loopring)

***** Sphere  wallet (for Horizen, combined with the faucet for extra bonus) - link here  

**** Crypto.com wallet (good interest staking and 50$ bonus in MCO) - link here

Free crypto (faucets and more)

****Lbry.tv (free crypto for watching or making videos) - link here

**** Bitfun( 3 min countdown - automatically deposit to Coinpot wallet ) - link here

*** Bonusbitcoin( 15 min countdown - automatically deposit to Coinpot wallet ) - link here

**** Moon Bitcoin ( 5 min countdown - automatically deposit to Coinpot wallet ) - link here

***** Horizen faucet ( 20 hours countdown - automatically deposit to Sphere wallet ) - link here

*** Tezos  faucet ( 7 days countdown - automatically deposit to Coinbase or Binance wallet ) - link here

** Tron and other crypto faucet (24 hours countdown) - link here  

Others

***** Publish0x  blog (Free BAT, DAI and Loopring for reading/writing - can combine with Atomic wallet) - link here

***** Brave  browser (Free BAT for using it, based on paid ads, very good AdBlocker and high speed) - link here    

Disclaimer: This text also can be re-published on my personal blogs, such as this one.