How Do Cryptocurrency Wallets Work and How Do I Choose One?

min read
An open coin pocket in a wallet with a symbolic bitcoin and other real coins spilling out.
BetMGM Mar 22, 2023, 7:30 AM

Cryptocurrencies are very much the Wild West of the investment world right now. It’s a volatile market where millionaires and beggars are made in an instant. Knowing this, if you’re still interested in investing in cryptocurrency, you’re going to need a crypto wallet to store the crypto that you invest in. But which one should you pick? 

Don’t worry. Choosing a crypto wallet doesn’t need to be like spinning the reels in online slots. There are a variety of solutions out there for you to choose from, but you need to do your homework before you settle on one. Of course, as with any new technology, this landscape is constantly changing and it could affect online casinos as it evolves, so it’s worth delving into it. 

Read on to see what crypto wallets are available for any curious investors who haven’t yet purchased any crypto, how they work, the criteria you should keep in mind when choosing one, and some popular crypto wallets that you can choose from.

What is a crypto wallet?

If you thought that a crypto wallet is where you store your cryptocurrency, much like the wallet that you keep your cash in, you’d be mistaken. But it’s also not your fault if you thought that a crypto wallet might function like an actual wallet.

Yes, despite their name, crypto wallets are not the virtual place where you store your cryptocurrency. Crypto wallets are actually more like keys because they give you access to your crypto funds that are stored on the blockchain. Your crypto wallet stores your public and private keys, which are similar to passwords, so that you can “unlock” your crypto funds on the blockchain. 

How do crypto wallets work?

As we’ve already discussed, crypto wallets are actually the keys to your funds that are stored on the blockchain. These wallets store your public and private keys so that you can access your funds on the blockchain to make trades or payments, such as paying for services at an online casino. However, not all wallets are the same. There are three different types of wallets and they have a number of key differences. 

The three main types of crypto wallets

Another important fact about crypto wallets is that there are different types of wallets available. These include a number of options.

Hardware wallets

This is a device that stores your private keys offline. Many hardware wallets can be used for a variety of different cryptocurrencies. This is also known as a “cold wallet” since your keys are not stored on the internet and are stored on the hardware device itself. In order to complete a cryptocurrency transaction, you will need to plug your hardware wallet into a computer. 

These are considered the safest wallet to use, but they are also the most expensive, so not the best choice for those looking for a free bitcoin wallet.

Software wallets

This is a piece of software, such as an app or a browser plugin, that stores your private keys online and can be accessed from a computer or mobile device. They are often connected to a specific type of cryptocurrency and a specific exchange. This type of wallet is also known as a “hot wallet” because it is an online solution. 

These are the most vulnerable wallets since they are accessible via the internet, making them easy targets for hackers and phishing attempts. These wallets are also connected to crypto exchanges for convenience, but that also means that the operators of the exchange could go rogue and steal your crypto funds, or you simply may not get your funds back if the crypto exchange goes bankrupt.

Paper wallets

This is a piece of paper with two randomly generated QR codes and your private and public keys. It is also considered a “cold wallet” since this information is stored offline. A paper wallet is vulnerable to theft, printing issues, as well as environmental damage and general wear and tear. It’s for these reasons that they have become less popular over the years, even though they were once considered the best way to store your cryptocurrency keys.

How should I choose a crypto wallet?

So you’re ready to get into the crypto space, but you need to choose the best wallet for your needs. Here are the elements that you need to keep in mind when you decide on a crypto wallet that’s right for you: 

  • Reputable provider: As we’ve mentioned, if you don’t go with a cold wallet, it’s critical that you choose a reputable provider who will protect you and your cryptocurrency. This will require a lot of research to ensure that you aren’t choosing a fly-by-night provider or a provider with little to no experience in the crypto space.
  • Security features: Consider the type of security features your wallet requires in order for you to access it. Whether it’s a pin or biometric login as part of two-factor authentication, or the option to back up your wallet on another device, it’s vital that your wallet has the latest security features to keep your valuable crypto safe.
  • User interface: Regardless of whether you are using a hot or cold wallet, it’s important that the user interface be intuitive and easy to use so that completing crypto transactions or any other task involving your crypto wallet is as painless as possible.
  • Multi-currency support: Are you trying your hand at investing in multiple cryptocurrencies? Then you might want a wallet that makes it easy to access your funds from one place. Make sure to check if a potential solution has multi-currency support if this is something you are looking for.
  • Length of time for storage: If you’re planning on staying in the crypto market long term (which can be known as “HODL” or “holding on for dear life” due to the volatility of the crypto market), you’ll want to go for a device that offers the best security, even if it comes at a higher cost. If you’re not planning to hang onto crypto for longer periods of time, you may want to consider a lower-cost wallet, even if it doesn’t offer the security features that a more expensive option does.

Best recommendations for crypto wallets

If you’re looking for a place to start with some recommendations, here are some suggestions from the Forbes Advisor’s article “Best Crypto Wallets Of March 2023”:

  • Best hot wallets: Coinbase Wallet, SafePal Crypto Wallet, DeFi Wallet, Exodus Crypto Wallet and Coinbase dApp Wallet.
  • Best cold wallets: Ledger Crypto Wallet, Trezor and Ellipal Titan Crypto Wallet.

You can find out more information about why they recommend these wallets in the article, but remember that the cryptocurrency space is not only incredibly volatile but can also be risky simply due to the number of scams and dubious people who are looking to take advantage of others. Make sure to do your research before you immediately jump on board with any crypto exchange that offers hot wallets.

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The good news is you don’t need a crypto wallet to start gambling at the best online casino, BetMGM. At our online casino, we have a huge library of exciting casino games for you to play and wagers for you to make. From blackjack to poker to roulette, you can enjoy these table games and more in both the classic and the new live dealer online formats. And if you want to spin some reels, be sure to check out the hundreds of exciting online slot games that are right at your fingertips!

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Our BetMGM editors and authors are sports experts with a wealth of knowledge of the sports industry at all levels. Their coverage includes sports news, previews and predictions, fun facts, and betting.

Our BetMGM editors and authors are sports experts with a wealth of knowledge of the sports industry at all levels. Their coverage includes sports news, previews and predictions, fun facts, and betting.