A crypto wallet is an application software whose primary function is to store and protect your cryptocurrency. It is one of the most important things that one needs to set up if you’re looking to trade in crypto. But instead of storing your crypto directly, the wallet safeguards the passkey that you need to access your crypto assets. In this article, we will look into one of the most important doubts surrounding the crypto wallet: whether you need a different wallet to safeguard different cryptocurrencies.

How Does A Crypto Wallet Work?

Crypto wallets are software applications that run on computers or other electronic devices, such as mobile phones or tablets. They work by establishing a connection between the associated cryptocurrency blockchain network through the internet so as to generate information that facilitates the transfer of crypto assets through that blockchain.

The information that is generated comprises two main things: a private key and a public key. A public key is one that contains information that we share with others to receive funds. Meanwhile, the private key is the passkey that helps you protect your assets and later access them. 

Do You Need Different Wallets For Each Crypto?

Now that we know what a crypto wallet is and how it works, let’s get into the main topic that we are here for, whether or not we require different wallets for each cryptocurrency. This is one of the main things that people keep wondering about when they first step into crypto trading. The answer to that question is “no”.

You don’t need to use multiple wallets to store each cryptocurrency. The thing is you can do this if you want, but there is no actual requirement that specifies you to do so. This is mainly because many wallets already let you store the keys for multiple cryptocurrencies. 

However, it is recommended that you use different wallets for different aspects of your trading. For instance, it is better to use hardware wallets for the long term and software wallets for day-to-day transactions. Having more than one wallet to your name can also work against theft and other losses.

Which Wallet Should You Choose?

Choosing a wallet is one of the most crucial phases in crypto trading. The selection of a particular wallet can depend on various factors. If you want to purchase cryptos and keep them stored in your wallet for long-term profit, then a cold wallet is one of the best options for you. However, if you’re planning on trading or swapping your coins frequently on exchanges, it would be better and much easier to use a hot wallet.

Also, if you have a habit of forgetting or misplacing your things, it would be a hassle for you to maintain a cold wallet, whose passkey can be lost easily if not properly stored. In such cases, you might want to consider setting up a custodial wallet. Unlike other wallets, the passkey for these wallets can be easily recovered through third parties, especially through the exchange associated with that custodial wallet.