How to choose a crypto wallet

A crypto wallet is a piece of software that enables you to communicate with Blockchain networks in order to send and receive cryptocurrencies. At its core, a wallet consists of a public key, which is your personal identifier, and a private key, which allows you to sign transactions and authenticate yourself to the network. The Blockchain is a distributed ledger that keeps track of the balances belonging to each individual wallet. Your wallet is a graphical interface that allows you to sign transactions to send funds and prove to the network that the transaction is legitimate. Miners or validators append legitimate transactions to the network, thereby changing the state of the Blockchain every few seconds or minutes.

Yes. You can download as many crypto wallets as you want and create new addresses (public & private keys). Alternatively, you can use the same seed phrase multiple times, simply by importing the seed phrase in other wallet applications. This means you will see the same balance and transaction history in different wallet interfaces.

Most crypto wallets are free to use and the code is open source for anyone to inspect. The fact that it’s open source is important so that tech savvy users can inspect the code and assess whether it’s secure or not.

Crypto wallets are pseudonymous, meaning they don’t reveal your real-world identity but they do have an identifying number attached to them. Transactions originating from wallets are public and can be looked at by anyone using a blockchain explorer. Most transactions happening on a Blockchain are anonymous. However, in rare cases authorities investigate who is behind a certain crypto wallet address. This can be done by tracing back transactions to where they originated from, in most cases this would be a crypto exchange where users have to sign-up with their real world identity.

The account holding your funds is an bookkeeping entry on a decentralized ledger - this ledger unlike a centralized one is virtually impossible to hack. However, what an attacker can do to hack your wallet, is stealing your private keys that you hold locally on your computer or on a pice of paper. If an attacker manages to get hold of your private key, they could transfer your funds out of your wallet into theirs.

Crypto wallets make money by integrating additional features like ‘buying & selling’ of cryptocurrencies or ‘lending & borrowing’. Some wallets make money by offering premium services like insurances or additional protection.