When buying or trading cryptocurrency, your first step should be acquiring a wallet. There are a variety of types to choose from and it’s essential that you find one suitable to your needs in terms of user experience, extra features and security – avoid those which have been compromised in the past!
Cryptocurrency wallets are software programs that store encryption keys used to verify ownership of digital currency. They can exist online, offline or as hardware such as a USB drive or smartphone; typically these wallets create pairs of public and private keys corresponding to each cryptocurrency they support; this ensures access only by their owner if their private key goes missing; unlike banks though, bitcoin wallets don’t store actual physical cash – bitcoins instead reside on blockchain, a digital ledger that logs transactions. Cryptocurrency wallets use keys as proof of ownership but if this happens it could mean losing access to funds that exist inside it!
An offline or online cryptocurrency wallet should never be shared. Never give out your private keys or seed/recovery phrase to anyone and store it safely somewhere like a locked box, secure password-protected file on your computer or phone or using encrypted protocols accessed over secure connections if using online wallets.
Online wallets require you to create one for each crypto you own; that way, each coin will have a specific address where other people can send it – similar to how mailing addresses work for letters and packages.
Your wallets should be configured to receive each type of cryptocurrency that you intend to store; you must be cautious that each one receives what it’s meant for, such as receiving Bitcoin from an Ethereum address and vice versa. Each type of cryptocurrency has its own blockchain that requires dedicated wallets in order to route funds in an effective manner.
Some wallets provide support for multiple cryptocurrencies, while others are more limited. Mycelium, available on both iOS and Android devices, provides limited support for bitcoin, ether and several ERC-20 tokens; on the other hand, BitPay’s mobile app handles most common cryptocurrencies including XRP and bitcoin cash as well as rarer ones like NEO and Stellar.
Some exchanges provide their users with wallet services. Coinbase’s integrated wallet allows users to store multiple cryptocurrencies within one account – this makes switching exchanges much simpler without incurring withdrawal fees for each coin you transfer!