With the wide range of cryptocurrencies available on the market, you will need a digital wallet to hold all of your assets. The different currencies you hold can dictate what kinds of wallets you maintain, and you also have some choice depending on how you want to organize these different currencies. Oftentimes, people keep multiple wallets to increase levels of security.
You can hold multiple cryptocurrency wallets, both to hold different currencies or hold multiple of the same currency. You can have more than one digital cryptocurrency wallet or take advantage of the many multi cryptocurrency wallets that allow you to keep all of your alternative currencies in one place.
Keeping multiple wallets may serve as a great strategy for some to manage their currencies and heighten protection. At the same time, this can also be a lot to manage if they are all held in separate places. In this article, we will go over the different types of wallets you can have for cryptocurrencies and what the benefits and disadvantages of having multiple are.
Holding Multiple Cryptocurrency Wallets
Managing your cryptocurrencies can be a bit overwhelming if you aren’t sure where to keep your coins or the best strategy for doing so. It is definitely possible to hold more than one cryptocurrency wallet, and many people do it! You may consider holding multiple cryptocurrency wallets can occur for a variety of reasons:
- Wallet doesn’t support alternative currency: Some cryptocurrencies may not be supported by the current wallet you use, and this will require opening a new wallet to store the assets.
- Keep investments separate: If you want to keep retirement investments, usable cash, and other categories of finances organized, you may find it easiest to keep separate wallets even if you are working with the same currencies.
- Greater levels of security: This is one of the safest reasons people will opt for multiple wallets. With the fear of hacking (money that is stolen cannot be recovered), holding multiple wallets will keep your coins in a variety of places so that they cannot be stolen in one account.
We will work through these categories as they relate to the different cryptocurrency wallets you can have and why you should consider if holding one or more wallets is best for your investments.
Types of Cryptocurrency Wallets
There are different types of cryptocurrency wallets that can be used in conjunction with one another to best manage and protect your coins. The types of wallets you choose are typically based on their capabilities, but more importantly, their level of security.
These are the types of cryptocurrency wallets you can choose from:
- Mobile/online: These are your riskiest wallets because they are tied to the Internet and usually are managed by a third party. Because of their web-related capabilities (which offer greater convenience), they can be hacked easier than other wallets. This doesn’t mean that you should avoid them, as the programs they run on may have increased levels of software protection. Keep smaller amounts of usable coins in these accounts.
- Desktop: You can create these wallets from a single computer, making them safer with only one access point. The major downfall of this wallet is the risk that occurs if the computer experiences a virus or is hacked.
- Hardware: Storing your private keys (the codes that allow funds to be sent from one user to another through the blockchain) on separate hardware is one of the safest options because it takes the coins completely offline. You will just connect the hardware to a computer and type in credentials in order to make transactions. This is best for keeping larger sums of cryptocurrency.
- Paper: This is one the more most secure wallet options where your transactions and codes are printed out, completely away from technology. Funds are sent to a public address that you have given for your wallet. You will want to keep these documents secure as anyone who physically has it can access your codes.
Keeping a variety of these wallets for increased security can be beneficial if you want to diversify where all your assets are kept.
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Benefits and Disadvantages of Holding Multiple Wallets
Holding multiple cryptocurrency wallets may seem overwhelming to you, but it can be an effective way to protect and manage your cryptocurrencies.
These are the top benefits of holding multiple cryptocurrency wallets:
- Security: Our number one reason to hold multiple wallets is for security. If you plan to use coins on a daily basis to make purchases, keep a small amount on hand for mobile or online wallets. Larger sums purchased as investments should be kept offline in a more secure space.
- Separating assets: As we have mentioned, keeping your assets separate from one another may make sense if you have different sums of money that you want to invest independently from one another. This can be done easily with separate wallets.
Here are the disadvantages of holding multiple wallets:
- Difficult to manage: If you have too many wallets, it may be hard for you to keep track of them all. We recommend sticking to 2-3 wallets if you can to minimize confusion and keep all your assets under control.
- Insufficient funds: If you have separate wallets for each currency, you may not have sufficient funds individually to make new purchases or transactions. Pooling these funds together in a consolidated wallet may allow for greater investment opportunities.
Having multiple wallets comes down to what you value in your cryptocurrency purchasing and selling strategy. Most people find security to be of the highest importance and using multiple wallets can increase the security among different assets you hold.
What Are Multi Cryptocurrency Wallets?
With the introduction of new cryptocurrencies, it was very difficult to find a wallet that would be able to hold a wide range of currencies. With advancements in technology, many wallets are now considered “multi cryptocurrency” and can hold multiple coin types. This is a safe way to consolidate wallets that may have been created separately in an effort to diversify assets.
A multi cryptocurrency wallet will allow you to reduce the number of wallets you hold based on the types of currencies they can accommodate. You can of course use multiple wallets to heighten security, but you no longer need to hold 5 different wallets just based on what kind of coin they can hold. Holding a few multi cryptocurrency wallets can be a happy medium.
Multi cryptocurrency wallets can be found in almost all types, including hardware, desktop, and online options. The hardware wallets emphasize their security features while online and mobile multi cryptocurrency wallets value convenience and easy use with heightened protection. The same principles of protecting yourself should be applied to these multi cryptocurrency wallets.
You can check out some of the best ranked multi cryptocurrency wallets here and get a feel for their range of features. The one you choose will again reflect your goals and security concerns for holding different coins.
Multiple Cryptocurrency Wallet Recommendation
While it may give you one more thing to think about, we recommend holding more than one cryptocurrency wallet to increase the level of protection over your coins and assets. Setting up these wallets is fairly simple and having one more account or key to manage is definitely worth the peace of mind you have knowing that your wallets will not be compromised by hackers.
Make sure you keep larger sums of cryptocurrency offline completely, and if you do need coins to spend or work with daily, that you use them online in smaller and safer values.