The crypto market has been one of the most discussed topics of the past few years. The explosive growth in quotes of top coins, the development of blockchain technologies, and market infrastructure have allowed brokerage companies to earn hundreds of millions of dollars, catching clients from all over the world.
One of the essential elements required for crypto trading is a crypto wallet. Unfortunately, not all brokers correctly understand the functionality and technological features of this software or hardware storage medium.
Today, we will share tips on choosing the best crypto wallet for a brokerage business, depending on the goals and objectives of the company.
What is a Crypto Wallet Anyway?
First of all, a broker needs to integrate a crypto wallet into the company’s software package. This is necessary so that clients could buy, store, and sell digital assets.
A crypto wallet is used as an analog of software where money is stored. Coins are digital records in the “parent” blockchain network, and the wallet only keeps their email addresses – links to a specific network node.
At its core, a crypto wallet is a unique program recorded in the hardware, exchange, or electronic infrastructure. It enables a client to store the addresses of owned digital assets and carry out electronic transactions. Each wallet, regardless of the type, contains two unique digital keys:
A user can transfer the public key to any person. It acts as a wallet number or bank account number.
A private key is a personal alphanumeric code that should only be known to the owner of the crypto wallet. It acts as an electronic signature, confirming transactions. It is impossible to transfer coins from the wallet without this very key.
Classification of Crypto Wallets
Depending on the characteristics, crypto wallets are classified into four types:
⚪ Hot wallet
⚪ Warm wallet
⚪ Cold wallet
⚪ Paper wallet
In addition, according to the type of stored assets, they can be mono- and multicurrency. Each of them is a good choice depending on the goals.
A “hot” crypto wallet is a personal profile of a user on a specialized website. You can create it by going through the standard registration and identity verification procedure. Registering on a cryptocurrency exchange already provides clients with a wallet for transactions.
It is called hot because a user can get access to funds at any time from a computer, laptop, smartphone, or tablet by entering a unique password and login into the website. Hot wallet offers maximum convenience for clients of brokerage companies.
A “Warm” wallet is a unique program installed on a computer, smartphone, or tablet. It can only be accessed through a specific device. This type of crypto wallet is not as convenient as a hot one.
Warm wallets can be of two types:
⚪ Thick – a program that stores the entire chain of the coin’s blockchain network in the computer’s memory.
⚪ Thin – a program that stores only a separate network section. The blockchain history is stored on a remote computer if necessary.
The advantage of thick warm wallets is their autonomy, and thin crypto wallets take up a minimum of space. Still, they are forced to constantly contact a remote server to check the integrity of the archive. A common disadvantage of warm solutions is “binding” to a specific gadget or computer. Loss, theft, critical breakdown, or a virus software can cause severe financial losses.
Outwardly, a cold crypto wallet looks like a USB flash drive with special software installed. A user can access the funds by connecting the device to any laptop or PC. The cold-type wallet does not require special software on the computer. It functions independently from other programs.
To access the funds, a client must enter a unique pin code in the information field. At the same time, the wallet is protected from spy programs – the private key cannot be stolen or copied. A cold wallet is the best crypto wallet for customers who store large amounts and value reliability. The downside of this solution is the price. Top models cost from $100 per unit.
A paper wallet is a simple piece of paper with public and private keys printed. You can buy such a crypto wallet on a specialized website. A platform will generate unique keys and issue them into an electronic document that can be downloaded and printed.
Anyway, a site does not store information. Critical data will be immediately erased from the service’s memory right after generating a digital copy. Paper wallet offers top-level security since there is no data about the private key on the Internet. It means that it cannot be stolen.
The paper type of wallet can be used like regular banknotes, paying for goods or services provided. For ease of use, the keys are indicated in a numerical letter code and duplicated in the form of QR codes.
Mono and Multicurrency Crypto Wallets
All types of wallets that we have indicated, except for paper wallets, can be mono-currency, used to store only a particular type of coins, and multicurrency, which can be used for different types of digital assets.
How to choose and buy a crypto wallet for a brokerage company?
Several recommendations for brokers:
- Do not use free IT solutions. Such software will most likely have limited functionality. Customers will be able to buy or sell only specific crypto pairs.
- Use products from developers who specialize in creating software for Forex/Crypto/CFD brokers. In this case, the software product will fully consider your company’s specifics and will be most beneficial to a client.
- The wallet must be 100% compatible with the rest of the software package used by the company. Therefore, it is better to immediately contact Profit Center FX – a reliable software integrator for Forex brokers. A team of professionals will integrate and configure a crypto wallet and provide technical support 24/7.
How to Choose a Crypto Wallet: Tips for Traders
To choose suitable crypto wallets and buy them, you need to remember a few simple suggestions.
First of all, if a client owns a significant amount in one coin, then it is better to use the official wallet of the “parent” blockchain network.
Another significant factor in the choice is the investment period. If a trader needs to conduct transactions quickly, choosing a hot crypto wallet with a withdrawal to a bank account or card feature is the right decision.
If a client wants to purchase and store digital assets in the next few years, it is better to buy paper wallets since they demonstrate the maximum level of reliability.
Choosing a wallet requires an individual approach based on the characteristics of the brokerage business. You should not waste time studying the top crypto wallets with a detailed description of the advantages and disadvantages of each model. A faster and most importantly effective solution is to use a proven and reliable crypto wallet by Profit Center FX.
The developer has been one of the leaders in creating and integrating brokerage software for more than nine years. Experts will help you optimize software based on the tasks and goals of the company and will provide your business with professional technical support 24/7.