As more people enter the cryptocurrency ecosystem than ever, it’s important to rehash a few common concerns about keeping cryptocurrency safe.
Cryptocurrency holders at any side of the crypto knowledge spectrum hold crypto security near and dear to their interests, often leading them to wonder– should you have multiple cryptocurrency wallets, or even use a dedicated cryptocurrency wallet for each digital asset?
For starters, diversifying your assets over multiple wallets is a sound way to minimize all the metaphoric cracking of all your eggs in one basket. But, it also means taking adequate precuations for each individual wallet, which can get cumbersome.
Cryptocurrency Wallets: Do You Need a Cold Wallet?
The average cryptocurrency user can likely go their entire lives without using an alt-coin wallet. However, those with significant amounts in a single digital asset like Litecoin or Ripple may find some value in keeping them safe in their own wallet, just as they would with Bitcoin.
While most modern exchanges do a great job at keeping cryptocurrency funds safe compared to their predecessors, they’re still some of the largest targets for hackers.
The concept of security diversification is to spread your holdings over multiple different wallets to reduce the probability of a hacker finagling their way into the lion’s share of your digital asset wealth on one account.
So, in theory, let’s say you’re planning to hold Bitcoin, Ethereum, NEO, and Ripple long-term.
The lion’s share is in Bitcoin and Ethereum, and you don’t plan on selling and want to minimize as much risk as possible, so you throw them on a hardware wallet like a Ledger Nano S or Trezor.
Next, they may choose to use a NEO-specific wallet, designed to make staking NEO for NEO Gas a seamless process.
Now, let’s say you want to keep Ripple within market reach, as its regulatory status has been a bit turbulent. Ripple holders may elect to keep their funds on any multi-currency wallet that supports XRP despite its recent unlisting by popular exchanges. To get faster and easier access to your XRP, you’d likely want to keep them on an exchange or another software wallet.
For example, StormGain pays 10% APY on any cryptocurrency users hold with them, including Ripple.
This way you’ve effectively kept your Bitcoin and Ethereum away from prying digital hands, but are still utilizing a portion of your assets to generate a return, regardless of market volatility.
Alt-Coin Wallets: Examples
StormGain is a cryptocurrency wallet provider with a free Ripple wallet. Launched in Jul 2019, the Seychelles-registered StormGain functions as a centralized exchange and cryptocurrency wallet for multiple digital assets.
Once a user installs the StormGain app, they automatically get a Ripple (XRP) wallet. Although convenient, this isn’t necessarily a unique feature to StormGain– what sets it apart is that it offers a 10% APY on Ripple deposits. This is a unique offering for a wallet-first provider, rather than a cryptocurrency interest account platform.
While exchanges such as Coinbase are delisting Ripple to stay away from the crosshairs of regulators, there are still independent wallet providers not only capable of storing the XRP, but paying interest on it.
Users may also enjoy a few other StormGain features:
You can buy cryptocurrency with fiat using Visa and Mastercard, although this feature may only be available in Europe.
The platform doesn’t require KYC.
It has a Cloudminer Tool that allows users to mine cryptocurrency directly from the mobile app.
There are two StormGain features that appeal to our argument of spreading your altcoin holdings.
The first is that StormGain is registered in Seychelles and adheres to a different set of regulations than popular U.S-based exchanges such as Coinbase do.
While United States exchanges do and should work together with regulators to pave the way for a safe maturation of the cryptocurrency industry, users may find some value in having their individual cryptocurrencies held on international platforms.
The second feature is that StormGain allows users to earn interest on their digital assets, which is slowly becoming more commonplace in the industry. For the purposes of comparison, 10% on coins such as Ripple is very competitive compared to other cryptocurrency interest account providers.
So, in theory, one could use something like StormGain as a place to earn passive income on their cryptocurrencies, and another multi-asset wallet like Guarda Wallet to safeguard other funds they’re not currently staking.
Final Thoughts: Should I Use Multiple Cryptocurrency Wallets?
Since a good majority of cryptocurrency wallet providers are free, the decision to use multiple wallets usually comes down to convenience and security.
Do you want to only have to worry about one wallet, or have your funds spread over 3 exchanges, 4 hot wallets, and 2 cold wallets?
Do you want your eggs in one basket, or do you want them spread over multiple?
If the above reasons appeal to you, we recommend testing the waters with small deposits in various hot wallets. If they can earn you some interest in the meantime, all the better.
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