Should You Use Multiple Cryptocurrency Wallets?
As more people enter the cryptocurrency ecosystem than ever, it’s important to rehash a few common concerns about keeping cryptocurrency safe.
Many beginners to intermediate-level users wonder whether or not they should have a dedicated cryptocurrency wallet for each digital asset.
One of the best ways to guarantee security, beyond taking the usual precautions like having a hardware wallet, is to diversify your assets over multiple wallets.
Rather, don’t keep your eggs all in one basket.
With the variety of multi-cryptocurrency wallet providers, there is no shortage of alternatives to spread your assets over.
Cryptocurrency Wallets: Do You Need an Alt-Coin 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.
To better understand the true value of diversifying your alt-coin holdings over different wallets, it might help to review one of the platforms: StormGain.
What is StormGain?
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 that 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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ABOUT THE AUTHOR
ABOUT THE AUTHOR
Alex Moskov is the Founder and Editor-in-Chief of CoinCentral. Alex leans on his formal educational background (BSBA with a Major in Finance from the University of Florida) and his on-the-ground experiences with cryptocurrency starting in 2012. Alex works with cryptocurrency and blockchain-based companies on content strategy and business development. He privately consults entrepreneurs and venture capitalists on movements within the cryptocurrency industry.
His writing has been seen in The Hustle, VentureBeat, Yahoo Finance, Harvard Business Review, and Business Insider. His articles on CoinCentral have been cited on publications like Forbes, TechCrunch, Vice, The Guardian, Investopedia, The Motley Fool, Seeking Alpha, and more.
He also regrets not buying more Bitcoin back in 2012, just like you.
You can connect with Alex on Twitter.