One of the most common questions in the crypto world, especially after you have been trading for some time, is where to keep your crypto funds? Should you keep it on one wallet or multiple wallets?
This article will go through different questions, such as is one crypto wallet enough, or maybe more than one is a more brilliant idea? Furthermore, we will analyze how to manage multiple crypto wallets if you do decide to store your crypto funds in more than one place.
Without further ado, let’s jump into details.
Is it okay for Me to Use Multiple Crypto Wallets?
Anyone interested in learning more about cryptocurrency transactions can find them on the blockchain ledgers. Where there are significant transactions, they will attract attention while the identity will remain secret. In fact, you don’t even need to be a careful investor to notice these transactions. This implies that other individuals will be able to keep track of your wallet every time you need to shift coins or tokens. To avoid way too much attention to your digital wallet, it would be ideal if you could use a few different wallets.
So, the public can view and examine the blockchain ledger. Even though this might not be a terrible thing per se, it might cause some concern. Everyone becomes aware of a wallet when it contains a sizable quantity of coins or tokens. So, this essentially means that even criminals will find it tempting, and you might quickly lose all of your cryptocurrency. It did happen in the past, right?
So, now we come to the fundamental question – based on everything mentioned above, is it ok for you to use more than one wallet, or in other words, multiple crypto wallets? We can safely confirm that the answer is yes.
Should I keep my crypto in different wallets?
Do you invest in cryptocurrencies and own a significant amount of Bitcoin and other cryptocurrencies? It would make sense to spread your cryptocurrency among several wallets for the reasons mentioned above. The best strategy to reduce the hazards related to using cryptocurrency wallets is to do precisely this. All your crypto holdings will not be lost if one of the wallets is breached or you forget the private key to a wallet. We have already explained why It can be dangerous to have a lot of crypto assets in one wallet.
Spend some time finding different digital currency wallets you may utilize. As a trader or investor, this will make it simpler for you to protect your money. You shouldn’t keep all of your coins in one wallet because there are so many potential problems.
Please check the best cryptocurrency wallets here.
Why having multiple crypto wallets is smart?
Don’t worry; using multiple cryptocurrency wallets is absolutely normal for you. Besides hacking and specifications regarding private keys (create security through diversity), there are a few other reasons why you should consider multiple crypto wallets.
Here are a few explanations for why you and other successful crypto investors and traders should consider storing crypto assets on multiple wallets.
Most Crypto-Specific Wallets are not Multi-Cryptocurrency Wallets
If you have been in the crypto industry long enough, you probably know that most crypto wallets are actually not multi-currency wallets. This means that you can be pretty limited when it comes to the number of cryptocurrencies you can hold if you decide to use only one wallet.
For instance, Litecoin Core is a desktop application wallet that lets you store only Litecoin. Even though this wallet is suitable for Litecoin, you must use a different wallet to manage the keys and other data related to those new coins if you are a Litecoin investor who has also ]bought Ethereum on the Ethereum network.
Gain Access to Staking
If you use a wallet that supports multiple cryptocurrencies, you won’t be able to take part in staking. In order to stake and receive rewards, you typically need to use a wallet designed for a particular coin.
Therefore, if you want to stake some specific coin, you need to use multiple wallets.
Create Savings and Checking Accounts of Sorts
Some active investors have multiple cryptocurrency wallets—not just for different coins—but also for the same coin.
Similar to how savings and checking accounts work at conventional banks, these can be used in crypto. One wallet (the best is to use a hardware wallet) could be assigned as the “savings” wallet that you hardly ever use. You can keep your most important keys and documents here. Then, only when you’re prepared to buy or spend coins can you connect a more practical software or website-based wallet to an exchange (this is your “checking” wallet).
Why Storing Bitcoin in a Single Wallet is a Bad Idea?
As mentioned earlier in the article, storing Bitcoin or any other cryptocurrency in a single wallet is not such a good idea. The main reason is that you can get hacked, especially if you have more significant transactions (financially). It’s simple – all of your transactions are visible on the blockchain ledger, so even criminals and scammers can see them.
You should consider other problems even if you are not worried about hackers. Due to the decentralized nature of cryptocurrencies, you might not be able to access your digital wallet if you misplace your private key or passcode. This implies that everything in your digital wallet could be permanently lost and never be restored.
You can access the wallet by entering the private key code for the digital wallet. If you forget the code, there won’t be much you can do to gain access to your cryptocurrencies.
Why Should I Consider Consolidating Multiple Crypto Wallets?
We just finished outlining many reasonings, even advantages, for managing your cryptocurrency using multiple wallets.
Why then would you even think about consolidating them?
We strongly advise against de-diversifying your portfolio; instead, we advise finding a method for efficiently keeping track of and managing all of your various wallets and coins. Here’s how that might work out for you.
Improve ROI (Return of Investment) by Learning from Patterns
Using a single tool to track your portfolio’s performance is essentially the only accurate way to see how your crypto portfolio is actually doing.
You can gain insight into what types of investments are successful, which moves didn’t go as planned, and other patterns by getting a clear picture of your entire portfolio, which can include everything from stocks to crypto wallets to antiques and beyond.
Achieve More Effective Diversification
Despite what it may sound like, consolidating all of your crypto assets, wallets, and other assets in one place is a great way to increase the effectiveness of your diversification efforts. We’re not suggesting storing them all on one platform; we’re discussing utilizing a single platform from which they can all be seen quickly.
Keep in mind that you can understand better how your assets are working together when you can see them all in one place. Making better diversification decisions across asset classes, industries, and other areas can be highly effective.
Peace of Mind
This might sound confusing to some investors, but consolidating all your crypto wallets can increase the peace in your mind. If you have so many different wallets to check on that you can’t keep up with all of them, how do you know how much of each coin you have—or worse, if they’ve been hacked and stolen?
You are unable to. Additionally, it can be highly harmful to your financial stability besides causing anxiety.
How to manage multiple crypto wallets?
Managing multiple crypto accounts is probably not easy, but it’s not the end of the world either. The best way to manage multiple crypto wallets is to use some of the widely popular crypto portfolio trackers. These platforms are emerging in the crypto industry nowadays, so it’s not surprising that more and more investors are turning to them when it comes to tracking extensive portfolios and multiple crypto wallets. You can connect multiple wallets to a crypto portfolio tracker and track all your crypto assets in one place.
Here are some of the best crypto portfolio trackers out there:
CaptainAltcoin's writers and guest post authors may or may not have a vested interest in any of the mentioned projects and businesses. None of the content on CaptainAltcoin is investment advice nor is it a replacement for advice from a certified financial planner. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of CaptainAltcoin.com