Different Types of Crypto Wallets Explained
You can play at crypto casinos even if you have no prior experience with gambling. However, you’ll need cryptocurrencies to participate. To obtain and store cryptocurrencies, you must have a special wallet.
We’ve created a comprehensive guide to crypto wallets to help you start using cryptocurrencies for online gambling. Please read it to learn about different crypto wallet types and how to pick the one that suits you best.
What Are Crypto Wallets and Why You Need One?
A cryptocurrency wallet is an app, software or device you need to make crypto transactions. As you probably know, cryptocurrencies don’t exist physically, and all transactions happen online. The main difference between a physical and a crypto wallet is that the former holds cash. In contrast, the latter holds the public and private keys you need to manage your crypto assets.
So, to put it simply, crypto wallets let you obtain, send and receive virtual money. Because of that, they are crucial to crypto gambling.
Custodial vs. Non-Custodial Crypto Wallets
Cryptocurrencies are bits of data, and as such, they are not stored anywhere. The wallet must find all the bits linked to your public address and sum them up. Then, to send virtual money, you must enter the recipient’s wallet address and sign the transaction with your private key.
Although this may sound complicated, you should be familiar with these terms to understand the difference between the two main types of crypto wallets: custodial and non-custodial.
Custodial wallets are crypto wallets managed by a third party. So, the third party takes control of your cryptocurrencies and private keys. At the same time, the third party ensures the security of your crypto assets.
While they are easy to use, custodial wallets have their disadvantages. First of all, you entrust your assets to another entity, which undermines the main aspect of cryptocurrencies: no middlemen and complete control over your money. Still, if you are a newbie to cryptocurrencies, custodial wallets can be the perfect fit for you. At least, as long as you choose a trusted crypto exchange that offers one.
In contrast, with non-custodial wallets, you have complete control over your private keys. To use these wallets, you must understand crypto’s basics, including how to store and secure your funds. Also, you must know how to back up your crypto wallet.
Hot vs. Cold Crypto Wallets
Another classification of crypto wallets is based on whether they are connected to the internet. Without further ado, let’s look at hot and cold wallets and the formats you can choose from.
Hot Wallets
If a crypto wallet is always connected to the internet, it’s a hot wallet. Hot wallets can be custodial and non-custodial.
In essence, hot wallets are software wallets. They can be available as browser extensions or mobile or desktop apps. Some hot wallets offer an exchange feature in addition to letting you manage your assets and make transactions.
Do you want to use a crypto wallet on your mobile device? Then, you can make hassle-free payments by scanning a QR code or using the NFC functionality. While they are more convenient and accessible, hot crypto wallets are more vulnerable to cyber threats.
Cold Wallets
As you can guess, cold wallets are connected to the internet only sometimes or, in some cases, never. As such, they are considered a safer option for long-term storage of crypto assets. Cold wallets can also be custodial and non-custodial.
The most popular cold wallets are hardware wallets. As their name implies, these are a piece of physical equipment you use to access your cryptocurrencies and make transactions. With hardware wallets, typically resembling USB sticks, you store your private keys offline and go online only to send or receive money.
Lastly, we have paper wallets, which are the most interesting format. They work entirely offline, enabling you to store public and private keys in a secure manner. Basically, these are printed documents containing sensitive information. While there is no risk of cyber theft of your keys, paper crypto wallets can be lost and can’t be recovered. So, you must keep them in a safe place.
How to Choose a Crypto Wallet for Online Gambling
What option you will choose to manage your crypto assets for online gambling depends on various objective and subjective factors. To help you make your decision, we’ve compiled them all below.
- Security and reputation: When using cryptocurrencies, you should always consider security. If you don’t trust third parties to control your private keys, choose a non-custodial wallet with an excellent reputation.
- User interface and experience: If you are a crypto beginner, make sure to choose a wallet with a user-friendly interface that provides reliable customer support. Also, check other users’ reviews to know whether the wallet is worthwhile.
- Compatibility: If you want to use various cryptocurrencies for gambling, please check whether the wallet you prefer supports them and if it’s compatible with the casino platform you want to join.
- Gambling habits: If you want to play at crypto casinos regularly and make frequent deposits, you should consider using hot wallets, as they are more convenient. However, if you plan to deposit large amounts, you should go for cold wallets, which are more secure for long-term storage.
Now that you are familiar with all the types of crypto wallets and the factors you should take into consideration when choosing one, you are ready to comb the market and find the best solution for you.
Marija Misita
Crypto Expert
Thanks to her journalism background, Marija has a methodical approach to writing about crypto casinos. With years of experience in research and analysis, she aims to provide clear insights into the world of crypto and online gaming and the points where they intersect. Whether discussing industry trends, regulatory changes or game mechanics, accuracy is her top priority.
