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87 lines
4.0 KiB
87 lines
4.0 KiB
6 years ago
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layout: org
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permalink: /:collection/:path.html
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---
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# Understand cryptocurrency wallets
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If you are, or plan to be a Stacks token holder, you need to think about how you
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can manage your tokens. How can you review your token balance or send and
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receive your tokens? You manage your tokens through a **cryptocurrency wallet**.
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Unlike the wallets you carry physical money in, a cryptocurrency wallet doesn’t
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hold your tokens. Your tokens are recorded by transactions which are themselves
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encrypted on the Stacks blockchain. The cryptocurrency wallet holds software
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keys. You use these keys and some software to interact with the blockchain and
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gain use of your tokens.
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## Token flow and wallets
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Tokens move from one wallet to a another via the blockchain. For example, say
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Lena decides to buy a book from Bitbooks, a company that accepts tokens. A
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complete purchase, has the following general steps:
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## Large-scale or institutional token holders
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Just as you don’t keep all the money you have in your bank in a physical wallet,
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you shouldn’t keep large amounts of tokens in your cryptocurrency wallet.
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Instead, if you have a large number of crypto assets, you should store them with
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a custodial service. Custodial services protect your token holdings using
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high-security systems.
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Custodial services have different techniques for storing crypto assets.
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The techniques vary according to factors such as the liquidity level you want to
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maintain or the security you would like. If you own large numbers of token
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assets as an investment, you should choose a custodial service as if you were
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selecting any investment service. Consider your needs, the firm’s reputation,
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fees, and so forth.
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{% include warning.html content="None of our ecosystem entities, Blockstack PBC,
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Blockstack Signature Fund, and Blockstack Token LLC, are custodial services.
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Neither the pre-genesis software wallet or the upcoming wallet are recommended for
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institutional holdings." %}
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Blockstack suggests a firm such as [Coinbase
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Custody](https://custody.coinbase.com/) for institutional holders. Coinbase
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Custody charges its clients a management fee based on assets. Of course, like
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any responsible asset holder, you should do your own research and select a
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service that meets your needs. The Investopedia's article [What Are Cryptocurrency
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Custody
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Solutions?](https://www.investopedia.com/news/what-are-cryptocurrency-custody-solutions/)
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is one place to start.
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## Choosing a cryptocurrency wallet
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You can choose among different types of cryptocurrency wallets. There are mainly
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two types of wallets, software and hardware.
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Software wallets run as programs on a computer desktop/tablet, online (web), or
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mobile phone. Desktop software wallets are downloaded to one computer. Because
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they are on one system, they are vulnerable to theft either of the computer
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itself or through computer hacking. Computer viruses can also impact desktop
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wallets.
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Similarly, mobile wallets are, but they also tend to be smaller and simpler.
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Online wallets run over the web and are accessible from any networked device,
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computer or phone. However, online wallets are vulnerable to hacking as well and
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also rely on third-party service providers who themselves may also be
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vulnerable.
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Hardware wallets store your seed and addresses on a device like a USB. To use
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these wallets, you connect them to a networked computer, enter a pin, and
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communicate to send and receive tokens across the web.
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Unlike a pure software wallet, hardware wallets can be disconnected and placed
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offline in a secure physical location like a bank deposit box. For this reason,
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hardware offers another level of security that software wallets don’t have.
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Blockstack suggests that you use a hardware wallet such as
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[Trezor](https://trezor.io/) or [Ledger](https://www.ledger.com/).
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Of course, you need not use a software or hardware wallet exclusively, you can
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use multiple wallets choosing whichever works best for you at a specific time.
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You'll just need to transform tokens to whichever wallet you want to move.
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