As of November 2022, the total number of cryptocurrencies amounted to almost 9,310. While many of them are not active, the humongous growth in a number of cryptocurrencies reflects their mainstream recognition. Looking back at 2013, there were only 66 cryptocurrencies. At the same time, crypto wallet usage has been gaining momentum, especially with the adoption of cryptocurrencies in innovative financial services.
Therefore, awareness regarding crypto wallet features is an essential requirement for any individual interested in accessing the value benefits of cryptocurrencies. Crypto wallets serve as gateways for beginners to use crypto as they help in storing and managing cryptocurrencies. The following discussion offers a detailed overview of the important features you should seek in a cryptocurrency wallet.
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Importance of Cryptocurrency Wallets
The general assumption about cryptocurrency wallets draws similarities between them and physical wallets, implying that crypto wallets store crypto coins and tokens. However, it is important to understand that cryptocurrencies are not stored on smartphones and computers as it would increase vulnerability.
Before finding out the essential cryptocurrency wallet features, you should understand how crypto wallets are important in the crypto landscape. Digital assets should be present in a decentralized blockchain environment, where all users in the network can access real-time updated copies of a distributed ledger. The distributed ledger registers crypto transactions through public-private key combinations.
The difference between crypto wallets and physical wallets is clearly evident in the fact that cryptocurrency wallets do not store actual cryptocurrencies. On the contrary, they serve as connectors to access the blockchain storing your crypto assets by using public and private keys. The important features of crypto wallets would start with the definition of the wallet as a collection of public and private keys.
You can draw similarities between a crypto wallet and a bank account. The public key is similar to the bank account number you can provide to an organization or individual for receiving cryptocurrency. On the other hand, the private key is similar to the PIN code you use for debit cards. The confirmation of every transaction with a private key ensures authentic transactions.
Another prominent entry among key crypto wallet features refers to the seed phrase, also known as the recovery phrase. The seed phrase essentially serves the role of a backup plan if you lose access to a crypto wallet or generated passwords. Every crypto wallet platform generates a seed phrase when you set up your personal wallet. It is important to write down the seed phrase and store it in a safe place, as anyone can access your wallet with the seed phrase.
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How Many Types of Crypto Wallets Can You Find?
The quest for finding top crypto wallet features should also focus on the variants of crypto wallets. You can find distinct variants of crypto wallets with differences in how they function, thereby suggesting differences in features. The common types of crypto wallets include custodial and non-custodial wallets, as well as hot and cold wallets.
Custodial and non-custodial wallets are self-explaining in their nomenclature, as custodial wallets take custody of the private keys of users. On the other hand, non-custodial wallets require users to store and manage private keys on their own. Therefore, non-custodial wallets imply the need for users to take complete responsibility for the wallet, keys, and seed phrase.
The variations in crypto wallet characteristics and usage approaches also differentiate wallets into hot and cold wallets. Cold wallets and hot wallets differ from each other in terms of connectivity to the internet. Cold wallets are physical wallets or devices used for storing private keys without staying connected to the internet at all times.
On the other hand, hot wallets are web-based, mobile, or desktop wallets you can use by accessing the internet. Hot wallets can offer flexibility to users, while cold wallets can ensure better security. Depending on your requirements and specific use cases, you can explore the differences in the generic features of crypto wallets to identify the suitable choice.
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Important Features of Cryptocurrency Wallets
The significance of crypto wallets alongside the different variants showcases how choosing the right crypto wallet is critical for using cryptocurrencies. On the other hand, developers have to recognize the variety in the user base of crypto wallets. As the crypto industry continues expanding, the answers to “What are the features of a crypto wallet?” could build up a massive list.
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Cryptocurrency wallets need to evolve with the emerging requirements of crypto users by adding new functionalities. However, there are some essential value-added functionalities you should seek in a cryptocurrency wallet. Here is an outline of the most important features you need in a crypto wallet in 2022.
Reliable crypto wallets should offer the flexibility for adding multiple accounts. Cryptocurrency wallets are crucial tools for investing in the world of cryptocurrencies. However, a crypto wallet must offer flexibility in adding multiple accounts for certain value advantages. Multiple accounts could be one of the top crypto wallet features for improving security through the diversification of funds in different wallets.
One of the basic functions of multiple accounts would refer to the creation of accounts for different activities, such as crypto trading, NFT trading, and DeFi investment. The facility of different accounts also helps in easier exporting of trading activities for taxation. Therefore, crypto wallets must have the feature for managing multiple accounts and moving between them seamlessly.
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The list of essential crypto wallet features would be incomplete without referring to user authentication. Cryptocurrencies are still in the early stages of development, thereby exposing them to various security risks. On top of it, the development of new crypto wallet apps and exchanges has opened up many sites of vulnerability. Hackers could also target crypto wallets for security breaches as the popularity and value of cryptocurrencies continue growing further.
Therefore, crypto wallets must offer an effective security mechanism with comprehensive user authentication frameworks. For example, two-factor authentication or multi-factor authentication are mandatory requirements for user authorization in crypto wallets. Without the assurance of security, any malicious agent can obtain unauthorized access to your wallet and the assets in it.
Integrated Support for Multiple Networks
Apart from the main network, some blockchains also offer a test network or testnet as well as a betanet in certain cases. In most cases, a general crypto wallet user would not think of using a testnet. However, crypto natives and developers could need such features of crypto wallets for better user experiences. The testing phase is an essential requirement in the process of developing and deploying decentralized applications.
Therefore, a crypto wallet should enable the facility to switch to different networks. In addition, cryptocurrency wallets could also feature the facility for adding custom network addresses. On top of it, developers could also look for facilities to develop private networks for testing objectives. The support for multiple networks in a crypto wallet could help in testing applications before launching them on testnet.
The next important highlight you must seek among mandatory cryptocurrency wallet features would refer to the address book. Users who need wallets for frequent crypto transactions could have a better experience with an address book. Rather than searching for public keys in the form of character strings, users could add labels to commonly used accounts.
Furthermore, the address book also serves as an important addition to wallet security as it can avoid discrepancies in the identification of receiver addresses. Wallet developers do not need a centralized server for storing the address book. For example, the user’s browser storage can offer an effective instrument for storing their address books.
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Ability for Importing Wallets
The usability of cryptocurrency wallets also depends on how effectively they can facilitate wallet imports. The answer to “What are the features of a crypto wallet?” would refer to the facility of importing any wallet. Users should have the flexibility to copy and paste their private keys for importing transactions. The ease of private scanning key alongside secure importing of accounts helps in ensuring better advantages for users.
In addition, users should also have the ease of labeling accounts, which can help in organizing the wallet. Most important of all, the crypto wallet must have the required functionalities for importing hardware wallets. On top of it, the support for renowned hardware wallets such as Ledger and Trezor could offer an additional security layer.
Support for Multiple Cryptocurrencies
The outline of features required in a cryptocurrency wallet would also point to the necessity of supporting multiple cryptocurrencies. Each crypto wallet should offer support for different cryptocurrencies as the community needs access to new and popular crypto coins and tokens.
Investors identify key crypto wallet features such as multiple-cryptocurrency support as essential requirements for choosing a wallet. New crypto projects and the underlying assets present promising prospects for exclusive returns within a limited time. Furthermore, the addition of support for new cryptocurrencies in the wallet could help encourage investors to seek long-term prospects through holding.
On top of it, supporting multiple cryptocurrencies on a wallet could offer effective chances for arbitrage trading with the wallet. Most important of all, support for multiple crypto coins and tokens in one wallet can ensure the diversification of portfolios in one wallet itself.
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Real-time Information on Conversion Rates
If you are looking for a cryptocurrency wallet, then you should seek optimally updated conversion rates. A cryptocurrency wallet without the facility of exchanging between different cryptocurrencies could affect its usability. The mandatory crypto wallet characteristics emphasize on the facility for seamless transactions through multiple methods.
Crypto wallets should have the feature for automatic calculation of transaction fees in accordance with the consistently changing conversion rates. Many crypto wallets offer the facility for purchasing crypto directly through your credit card with the help of services such as Circle or Moonpay.
New users who want to use cryptocurrencies could use such features to gain flexible entry into the community. In addition, the facility for fiat-to-digital currency conversion must complement the ability of wallets to ensure seamless transactions.
Information about Account and Pricing
The ease of managing your cryptocurrencies also serves as one of the top crypto wallets’ features everyone should look for. Information about the pricing of cryptocurrencies is an integral aspect of crypto wallets, which can support the navigation of a blockchain ecosystem. For example, wallets can provide information on the pricing of tokens that have not been registered on renowned price-tracking websites.
The facility of pricing information and live updated charts are effective tools for investors and traders interested in cryptocurrencies. With real-time pricing information, the wallet could offer a precise estimate of the account balance to users. As a result, users could maintain their portfolios with frequent monitoring of their value and their performance over the course of time.
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Automated Logout Facility
Your search for the best crypto wallet features would also point at unique additions such as automatic logout. The popularity of crypto wallets can draw the attention of hackers, who could try to compromise wallet credentials when users are not using the app. For example, wallets logged in for an extended period of time without any activity can open up the possibility of compromised user accounts. Wallets should offer the facility of automatic session logout to prevent malicious agents from accessing user credentials or manipulating transactions.
Another vital feature required for better usability of cryptocurrency wallets refers to push notifications. New cryptocurrency wallet features must emphasize push notifications, which are essential tools for users to stay informed with details of crypto transactions. Push notifications could help users track the status of their transactions without accessing the wallet app itself. On top of it, push notifications could offer updates about changes in the prices of assets in their portfolio. In addition, the push notifications can also help in obtaining information about the updates in the crypto wallet app.
The most critical addition among features of crypto wallet would refer to usability with the facility of a simple yet robust user interface. At the same time, it must offer compatibility with multiple operating systems for better flexibility to developers. It is important to ensure that the wallet app is suitable for non-technical users. The best approach for finding out the usability of a crypto wallet would focus on the ease of its user interface. The user interface should feature simple components which users can navigate easily to manage their crypto assets.
The additional feature you should seek in a crypto wallet would refer to support for NFTs. With a tab for showcasing information about NFTs and storing them in a wallet, users are more likely to enjoy the benefits of interoperability. Non-fungible tokens are emerging as an integral highlight of the blockchain ecosystem. Therefore, a crypto wallet offering access to the new ecosystem could imply that it is more appealing to new users.
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The outline of the important crypto wallet characteristics offered a comprehensive list of reasons to choose one now. However, wallets claiming the facility of recent features should be subject to scrutiny before you invest in crypto assets. Crypto wallets are more than just a collection of public and private keys in the existing ecosystem. You can also use them to achieve multiple benefits in accessing the potential of cryptocurrencies. Explore the details of a cryptocurrency wallet carefully and learn more about them now.
*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!