Thinking of signing up for your first ever crypto wallet but pausing with your fingers hovering over the button? You’re not by yourself there! Lots of people start signing up for wallet services and then hesitate, not sure whether it’s “for them” or not. But if you’re interested in using crypto, you’re going to have to get a wallet, and yes, first you need to understand how these things work. No moths flying out of the wallet here – but let’s look at what is going on and get to grips with all you need to know.

First up, let’s acknowledge that you do generally need a crypto wallet if you’re going to use any kind of cryptocurrency. Sure, there are workaround options, but this is a pretty fundamental part of trading… so with that in mind, let’s come to understand how wallets work. First, though, if you’re a bit unsure about crypto in general, you can check out our essential guide for first-time crypto – there’s tons of useful info for you there.

Now, let’s look at wallets and how they work!

Your Wallet Holds Your Keys

Does this sound like a weird thing to say? Well, maybe, but it’s true. Your crypto wallet holds the “keys” to your cryptocurrency, and these keys are absolutely critical for handling your currency. Remember, that currency doesn’t actually exist in any physical form (no notes, no coins, no nothing) – so your wallet is what you’ll need to handle your currency.

You get two keys to your wallet, one being public and one being private. The keys let you sign and authorize transactions – so when you want to buy or trade, you’re going to be logging in and using your wallet. Think of it a bit like logging into your bank account securely – it’s the same deal here. And if those keys weren’t locked up in a digital wallet? Well, anyone could do what they wanted with your cryptocurrency… which might not be a good thing!

So, how does it work? The public key is a bit like your email address or your bank account number. Every time you want someone to deposit currency in your account – yes, they’ll need that key. The private key, though? Nobody but you should know what that is! It’s critical that you both keep it safe from others and don’t lose it. Do not give it out, whatever you do!

You Need Wallets For Transactions

First up – a quick “obvious” statement: you can’t make crypto transactions without a wallet (well, you can as there are a few workarounds, but seriously, it’s just better to have your own wallet). Trying to operate without one if you’re even a little serious about cryptocurrency is just a headache.

And with people using and swapping cryptocurrencies a lot more these days, crypto wallets are definitely seeing an uptick in their user base. There are so many things you can use crypto for now, no wonder! Lots of casinos, for example, have adopted cryptocurrencies, and if you’re regularly making financial exchanges (hopefully with some big wins to your name), you’ll really benefit from the convenience of a wallet.

So, imagine you’re unwinding on a weekend. You’re playing at your favorite slot games and to your delight, you take home a big win! Now, those funds go straight into your crypto wallet, much faster than they would into your ordinary bank account. Sound attractive? Well, it is, and that’s why a ton more players are moving to this kind of gambling. It’s fast, efficient, and can even offer you lower fees a lot of the time. Win, win, win, right?

Hot Wallets VS Cold Wallets

And if you’re confused by hot wallets VS cold wallets, again, you’re not on your own. Fortunately, these are pretty simple. You can have a physical, offline wallet (that’s the cold one), or a digital, online wallet (the hot). If you go for a cold wallet, you’ll have an actual, physical device, while a hot one will all be stored online. 

Prefer a USB stick you can slot into the computer only when you decide to? Cold wallets are for you. On the other hand, if you’re a person who constantly loses small pieces of tech (no judgment, of course), a hot wallet would probably suit you better.

Not sure which sounds better? It’s okay – you can have multiple wallets! Many people do this because they like the different benefits different types of wallets offer, and you also reduce the risk of losing all of your crypto if something bad happens. It’s a smart idea, but do make sure you hold onto those keys, or you’re going to have serious problems accessing your cash.

Lots of people split their crypto so that they keep a small amount in a hot wallet they can access all the time (for gaming, purchases, etc.), and the rest in a cold wallet that’s securely stored somewhere in the home. That’s a pretty clever approach!