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Crypto Wallets Explained (Hosted, Hardware, etc)


mindnomiks
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Wallets!!!

 

So, what are wallets? What are the different types? Why so many wallets? And, which type of wallet should I go with?! Those may be some of the questions you may have, being new to this!

 

Welp! Wallets would be where a record of your transactions can help with the tracking of your crypto currency, for instance GUAP. This can be seen/compared to having a checking/saving account where you can view the many different transactions based on the account and routing number given to you by your bank. There many different wallets but the most popular type of wallets are:

  • Hosted/custodial
  • Non-custodial
  • Hardware

Keep in mind that, just like a bank account, your money is not physically at that account number. A record of that transaction, for instance the deposit, is. Same with the wallet. Your "coins"/"tokens" exist on the blockchain, the technology enabling the varied digital currencies.

Though I am not here to tell you which wallet to go with, nor to dissect why there are so many wallets (over 70+) out there or give a class on blockchain, as I am learning still too, there are differences to the types of wallet you end up deciding to go with, however.

Hosted/custodial
Let's look at "Hosted" wallets. What are they? Why are they available to you as an option? Hosted wallets would be similar to having a bank account at an actual bank or credit union. A Coinbase type, for instance, that is both your exchange and offers a wallet means that the wallet they offer is hosted. They hold and manage your coins/tokens for you, just like a bank does when you deposit money in that account. Some people, those called crypto veterans, would say that not holding your own keys, then not your crypto. I guess it would be same as a bank account. The bank can prevent you from withdrawing money in whatever situation may be called/considered an emergency. The main benefit of going this route would that if you loose your password, you don't have to worry about having lost your crypto, like you do if dealing with your own non-custodial wallet.

Non-custodial wallets.
Welp, GUAP's wallets are just that. Non-custodial. What does that mean? A non-custodial wallet, like GUAP or MetaMask, Trust, crypto defi, etc. puts you in complete control of your crypto. What does that mean? Welp, in a short sentence it means you own your own bank. You just don't have a brick and mortar, like a JP Morgan, but you do have a mobile one like your GUAP wallet. So, if you loose access or something happens to that wallet @creeptodiva won't be able to help you. You are the master of your own universe on this one. If you would like more control over your coins/tokens and/or bank then this is where you would start looking into. Why would you think about this option? Welp, if you want to Stake, farm, lend, borrow, etc. then you are only able to this with a Non-Custodial wallet, at least for now. Hosted wallets are looking to add these features too, they are not there yet, however.

Hardware.
What are they? Also known as "cold" wallets, they are about the size of a thumb drive and they store the private keys to your crypto offline. "Cold" wallets can keep your crypto secure even if your computer is hacked. The main barrier to getting or starting with one would be cost. They can cost upwards of $100+ to buy. You do get much of the same benefits as a non-custodial (software) or "warm" wallet. It's just that much of the lending, staking, etc. happens through third parties. For staking, with a "cold" wallet, I would have to research that and get back on that. Don't have any idea how that works. This post is not about staking anyway! 😁🤣

 

Welp! I hope that this gives you a quick grasp of what wallets are and help you in choosing what best works/fits you. Nothing, in my opinion, is wrong with choosing any of the above routes for your money/financial journey. Either way you go, make sure it's what's right for you. Remember, this is the start of your financial freedom and investment into your own continued freedom from the status quo. Happy Guaping!!! 😁

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