Did you know that you can buy plane tickets with cryptocurrency? That’s not all! You can also get coffee, groceries, and cars!
The thing is, while some car dealerships and retailers may accept bitcoin, not all of them do. That means you’ve got to get a little creative.
You can use bitcoin to buy a gift card or go to a crypto ATM and exchange your digital currency for cash that you can spend.
No matter which option you go with, you’re going to need a physical crypto wallet to hold your coins. Check out this guide to learn the benefits of having one.
What Is a Physical Crypto Wallet?
A digital wallet is a crypto storage solution. It represents how much cryptocurrency you have available to use at one given time.
You’ll have to set one up before you begin buying and selling bitcoin. Luckily, you have options. You can choose between cold and hot wallets.
Cold wallets are physical wallets that work without an internet connection. Hot wallets are a type of software that requires an internet connection to function.
The two major types of cold wallets are hardware and paper. They both come with their own sets of pros and cons, but they do have one thing in common. They’re much more secure than any hot wallet you can buy.
Hardware Wallets
Crypto hardware wallets store the keys that allow you to access your cryptocurrency. They often take the form of a flash drive that you plug into an electronic device such as a computer or bitcoin ATM.
You can pick up a hardware wallet at almost any electronics store. They can be expensive, but having one will keep your private key away from hackers.
Pros of Hardware Wallets
As stated above, cold wallets are much more secure than hot ones. Hardware wallets are no exception!
They can keep your private key hidden, and you’ll never have to worry about computer viruses. Every transaction must be verified.
Security isn’t the only benefit of hardware wallets. They also give you complete control over your digital funds, and they can hold multiple cryptocurrencies at once.
It Keeps Your Private Key Hidden
Private keys are long alphanumeric codes that allow a user to receive, send, and access cryptocurrency. As you can imagine, it’s important to keep your personal key away from others.
A hardware wallet will allow you to do just that. The only time you’ll enter your key will be on an encrypted device that works offline. This keeps your private information well away from hackers.
Some hardware wallets go the extra mile by requiring a biometric login. Even if someone manages to get their hands on your wallet, this security feature will kick them out.
Hold Multiple Digital Currencies
Despite their small size, hardware wallets can hold a lot of data. In fact, most of them can store your bitcoin and then some.
If you would like to buy bitcoin, Litecoin, and Ethereum, your wallet will be able to hold them all.
Safe From Computer Viruses
The biggest downside of software wallets is that they’re vulnerable to hackers. Cybercriminals can infect the software with viruses and get their hands on your private keys.
Since hardware wallets don’t involve any software, it’s pretty much impossible to infect them with viruses.
Transaction Verification
As an added security measure, most hardware wallets have a transaction verification feature. What this means is that every transaction you make has to be verified through your hardware wallet.
Unless someone gets their hands on your wallet, they won’t be able to make a transaction without you knowing about it.
Control
In the case of some software wallets, you don’t have control over your private keys. Instead, you’ll let a third-party company hold onto them. When you’re a beginner, it does make managing your cryptocurrency easier, but it does take away your control.
When you buy a hardware wallet, you own your private keys, which means you have more control over your funds.
Cons of Hardware Wallets
There are a few cons that come with investing in a hardware wallet. For one, they can be expensive. They’re also harder to use than a software wallet, and there are accessibility issues.
Price
You can go to pretty much any electronics store and buy a hardware wallet, but it will cost you a pretty penny. You might be able to find an older model for $50.
If you want all the bells and whistles, however, you won’t be able to get away without spending less than $200. If you’re only holding a small number of bitcoin, making that kind of purchase is a little unreasonable.
User Experience
Hardware wallets are more difficult to use than software wallets. If you’re not at least a little bit tech-savvy, you’ll run into difficulties during the setup process.
In comparison, downloading a wallet app on your phone and getting it going will only take a few minutes.
Accessibility
Having a hardware wallet is a little inconvenient because you’ll need to have it with you when you go to this location if you’re going to access your bitcoin.
You have to physically plug it into the ATM before you go about your transaction. It’s easier to forget a small flash drive at home than it is your cellular device.
Paper Wallets
A paper wallet is a piece of paper that contains your private keys. You’ll make one yourself by going to BitAddress and downloading a zip folder that contains the file you’ll use to generate a random key.
After downloading the file, pull it up in a web browser that you’ve uninstalled all the extensions from. To produce the key, you’ll move your mouse around on the page or type random text.
Before printing your wallet, be sure to disconnect your computer and printer from the internet.
Pros of Paper Wallets
As you can see from the steps above, paper wallets are simple to create. As long as you follow the instructions to the letter, they’re secure.
If later on, you decide that you want to convert your paper wallet to an electronic one, the process isn’t too difficult.
Free and Easy to Create
The entire process of creating a paper wallet only takes about a minute. It’s also one of the most affordable crypto storage options.
Generating a private key and printing it out will cost you a grand total of zero dollars and zero cents unless you’re counting the money you spend on home internet.
Security
Since using your paper wallet doesn’t require you to have an internet connection, your private key will be safe from hackers.
You can also link your paper wallet to a password. This way, if a thief does manage to steal your wallet, they won’t be able to touch your cryptocurrency without a lucky guess.
Easy to Import
If you decide that you want to turn your paper wallet into a software wallet, the process is pretty stress-free.
To transfer your private key, you’ll download your software wallet of choice and use it to scan the QR code located on your paper wallet. That’s it!
Cons of Paper Wallets
As secure as paper wallets are, they’re not without their security risks. They’re also vulnerable to damage.
If your kids decide to color on it or toss it in the toilet, you no longer have your private key.
Large Exposure Risk
When printing out a paper wallet, if you don’t follow the instructions to the letter, a cybercriminal can intercept and steal your private information. Again, disconnect your computer and printer from the internet before printing!
If you don’t have a printer at home, invest in one. Don’t use a shared printer at a school or library.
You’re going to need to be able to read the information on the paper, so make sure your printer has a full ink cartridge before you proceed.
Don’t leave your paper wallet unattended. If it’s not password protected, and someone gets their hands on it, they’ll be able to steal your cryptocurrency.
Vulnerable to Damage
If your roommate mistakes your paper wallet for garbage while they’re cleaning, you’ll lose access to your private key forever.
It’s a piece of paper, so it’s not exactly durable. Your kid could destroy it by coloring on it. You could rip it when you try to unfold it and use it.
Storing Crypto in a Physical Wallet
Before you use a bitcoin ATM or buy cryptocurrency online, you’ll have to invest in a physical crypto wallet.
While you can get a non-physical software wallet, hardware and paper are more secure than a computer program. You’ll never have to worry about a cybercriminal stealing your private keys.
For more information on cryptocurrency and digital wallets, visit the Tech section of our blog.