Most beginners just pick any wallet they come across without doing any due diligence. Choosing a cryptocurrency wallet randomly is the wrong way of doing it. You should be very cautious about choosing a wallet because it stores both your private and public keys and if it is compromised, you will lose all your coins. This is why you have to take deliberate steps to choose the best wallet.
Here are the top 6 criteria for choosing a cryptocurrency wallet:
Private keys control
A good cryptocurrency wallet should give you full access and control to the private keys. Anyone that has access to your private keys can move your cryptocurrency. It’s, therefore, a security risk to use a wallet that denies you access to your private keys. This is the reason why using your exchange as your wallet is a bad idea.
Security and backup features
With so many people losing their money to hackers every waking day, you want to go for a cryptocurrency wallet that has the best security and backup features. Some important features include 2FA, 3FA, pin codes and seed backup keys. When it comes to security, you can never have too much of it.
This is an often overlooked and yet important feature. A cryptocurrency wallet that has an active development community is a very crucial aspect. The developer community will provide maintenance and quickly fix any arising issues. Furthermore, an active developer community is one way of knowing how good software really is.
A hot wallet is one, which is stored online, while a cold one refers to the wallets that are stored offline. Hot wallets are the most susceptible to hacker attacks. When choosing a cryptocurrency wallet, you must decide whether or not you want a hot or cold wallet and why. If you are a holder, you are better off using cold wallets but day traders might need to use hot wallets because they need to access their Bitcoin more regularly.
Ease of use
The last thing you want is a cryptocurrency wallet that is too complicated. You don’t have the time to keep going through the documentation just to figure out a simple operation. Look for a wallet that has an elegant user interface which is easy to use.
Know Your Customer (KYC) is a requirement for financial intuitions dealing with fiat due to regulatory issues. Since cryptocurrencies are currently unregulated, KYC is not needed. In fact, providing too much personal information in crypto would be opening a door for potential phishing attacks. It is best to go for wallets that do not require KYC.
Most beginners rely on recommendations from friends when choosing a cryptocurrency wallet. This can be a very bad move especially if your friend is a novice in cryptocurrency. It is best to do your due diligence before settling on a wallet. You can use the criteria above as your checklist for picking a good wallet.