Cryptocurrencies such as Bitcoin and Ethereum have been making waves in the financial market for several years now. Many people wonder what the purpose of having a cryptocurrency wallet is. The answer is simple, it is to store, send and receive cryptocurrencies.
But then, many people wonder if they have to create multiple cryptocurrency wallets to hold their different types of cryptocurrency or if a single crypto wallet can hold more than one.
Can a Crypto Wallet Hold Any Coin?
It is possible to store any cryptocurrencies in a crypto wallet depending on the type of cryptocurrency wallet used.
A single wallet cannot be used to hold any wallet but the only type of cryptocurrency it is created for because each cryptocurrency has its own address and its own set of rules which govern how it can be stored.
But for a multi-currency crypto wallet, having more than one type of cryptocurrency stored on it is possible. These crypto wallets allow you to store different cryptocurrencies within the same wallet, which is much easier than having to use a different wallet for each coin.
Why multi-currency crypto wallet is a good idea
A multi-currency crypto wallet allows you to hold multiple cryptocurrencies in one place. This is especially useful if you’re looking to diversify your holdings. It’s also convenient for when you run into problems with one of your crypto holdings, like an exchange that didn’t want to let you withdraw your crypto holdings. Or when you want to keep your holdings in a secure place that’s not online, which is a good idea in the long run.
Pros of holding cryptocurrency in a multi-currency wallet
A multi-currency wallet can be helpful for storing different types of cryptocurrencies in a single wallet without having to stress over moving from one wallet to the other to perform your task.
A multi-currency wallet can help mitigate losses when you can manage all your Crypto in a single wallet
A multi-currency wallet can help alleviate errors when sending and receiving payments
Can reduce fees or payments attached to using more than one crypto wallet.
Cons of holding cryptocurrency in a multi-currency wallet
A multi-currency wallet needs to be backed up and monitored carefully
A multi-currency wallet may not be able to hold all the cryptocurrencies the user may want to store. Multi-currency wallets are not created equal, though they all allow more multi-currency, they may not have the specific one a user is looking for. Choose only a wallet that allows you to hold all the Cryptos you want.
Higher risks. There is a caution about keeping all eggs in one basket, the same thing applies here. If your multi-currency account got compromised then all your Crypto is at risk.
You need to be extra careful in keeping your wallet safe.
How to set up a multi-currency crypto wallet?
– Choose the best multi-currency crypto wallet for you
There are many different multi-currency crypto wallets available to choose from. Some are easier to use while some offer a better level of security. To choose a wallet that fits your personal needs, start by researching how each wallet works, how secure the wallet is, is it easy to use and does it support all the Cryptos you need? These are the questions you should get answers to before choosing a wallet.
– Generate your new wallet.
Follow the steps required to create your new wallet. If you are not really clear on what to do, the wallet instructions, forums and search engines would put you through.
Select the default currency of your choice from options available
Though you would be holding more than one cryptocurrency on your wallet, multi-currency crypto wallets still requires you to hold one Crypto as the default to use for your account
– Complete your setup
Make sure you fulfil all criteria required to start up your wallet, so you can start making use of it. Note it is quite easy to set up a crypto wallet.
– Keep your wallet information safe and follow other tips for keeping multi-currency crypto wallets safe.
Importance of backup for your wallet.
One of the most common mistakes that people make when it comes to keeping their cryptocurrencies safe is that they don’t have a backup.
If you were in a situation where you lost your phone, needed a new phone, or wanted to give your wallet to somebody else, what would happen if there was no way for you to access it?
The best way to avoid this situation is by backing up your wallet. This is the only way that you can be sure that you will always be able to access your cryptocurrency even when something unexpected happens.
How to keep multi-currency crypto wallet safe
First of all, it is necessary to use a safe place to hide your wallet, such as the encrypted disks of the computer.
Secondly, you have to back up your wallet regularly. You can use printed paper or an encrypted disk to keep it safe.
Keep your private keys offline. The private keys are what allow someone to be able to spend or transfer your funds. Therefore, if you forget the password to your wallet, you will not be able to access the funds in the wallet. The private keys should be stored offline to ensure that if your device holding the wallet is hacked or stolen, no one besides the rightful owner will be able to use your funds.
Never choose a passphrase that is easily guessable. It should be at least 8 characters long, should use upper case letters, lower case letters, numbers, and symbols. All of these aspects make your passphrase harder to crack.
You can keep your multi-currency crypto wallet safe by utilizing a cold storage wallet. Cold storage is the most secure way to keep your digital assets safe. It requires you to securely store your private keys offline. This is the only way to ensure that your assets will not be hacked, and it can be done with a paper wallet or a hardware wallet. These wallets do not hold your assets with a third party. They store your assets directly on the blockchain and allow you to transfer funds whenever you want.