With the wide range of cryptocurrencies available on the market, you will need a digital wallet to hold all of your assets. The different currencies you hold can dictate what kinds of wallets you maintain, and you also have some choice depending on how you want to organize these different currencies. Oftentimes, people keep multiple wallets to increase levels of security.
You can hold multiple cryptocurrency wallets, both to hold different currencies or hold multiple of the same currency. You can have more than one digital cryptocurrency wallet or take advantage of the many multi cryptocurrency wallets that allow you to keep all of your alternative currencies in one place.
Keeping multiple wallets may serve as a great strategy for some to manage their currencies and heighten protection. At the same time, this can also be a lot to manage if they are all held in separate places. In this article, we will go over the different types of wallets you can have for cryptocurrencies and what the benefits and disadvantages of having multiple are.
Holding Multiple Cryptocurrency Wallets
Managing your cryptocurrencies can be a bit overwhelming if you aren’t sure where to keep your coins or the best strategy for doing so. It is definitely possible to hold more than one cryptocurrency wallet, and many people do it! You may consider holding multiple cryptocurrency wallets can occur for a variety of reasons:
- Wallet doesn’t support alternative currency: Some cryptocurrencies may not be supported by the current wallet you use, and this will require opening a new wallet to store the assets.
- Keep investments separate: If you want to keep retirement investments, usable cash, and other categories of finances organized, you may find it easiest to keep separate wallets even if you are working with the same currencies.
- Greater levels of security: This is one of the safest reasons people will opt for multiple wallets. With the fear of hacking (money that is stolen cannot be recovered), holding multiple wallets will keep your coins in a variety of places so that they cannot be stolen in one account.
We will work through these categories as they relate to the different cryptocurrency wallets you can have and why you should consider if holding one or more wallets is best for your investments.
Types of Cryptocurrency Wallets
There are different types of cryptocurrency wallets that can be used in conjunction with one another to best manage and protect your coins. The types of wallets you choose are typically based on their capabilities, but more importantly, their level of security.
These are the types of cryptocurrency wallets you can choose from:
- Mobile/online: These are your riskiest wallets because they are tied to the Internet and usually are managed by a third party. Because of their web-related capabilities (which offer greater convenience), they can be hacked easier than other wallets. This doesn’t mean that you should avoid them, as the programs they run on may have increased levels of software protection. Keep smaller amounts of usable coins in these accounts.
- Desktop: You can create these wallets from a single computer, making them safer with only one access point. The major downfall of this wallet is the risk that occurs if the computer experiences a virus or is hacked.
- Hardware: Storing your private keys (the codes that allow funds to be sent from one user to another through the blockchain) on separate hardware is one of the safest options because it takes the coins completely offline. You will just connect the hardware to a computer and type in credentials in order to make transactions. This is best for keeping larger sums of cryptocurrency.
- Paper: This is one the more most secure wallet options where your transactions and codes are printed out, completely away from technology. Funds are sent to a public address that you have given for your wallet. You will want to keep these documents secure as anyone who physically has it can access your codes.
Keeping a variety of these wallets for increased security can be beneficial if you want to diversify where all your assets are kept.