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Ask CryptoVantage: Should I Store All My Crypto in One Wallet?

You have done it; you have bought your crypto of choice and are ready to hold on for dear life.

But wait, should you store it all in one wallet or maybe divide it up across a few? The answer to that question depends on a few factors, all of which come down to personal choice and risk aversion.

In this edition of Ask CryptoVantage we will discuss how you should store your crypto — on one wallet or multiple — and the potential risks or benefits to the varying strategies.

Crypto wallet

One Wallet or Multiple?

Much like with fiat currencies, deciding how to store your cryptocurrencies can be tricky.

If you have a lot of different assets it can become even more complicated as it is possible that you will have to use multiple wallets if not every asset is compatible with one wallet.

Then within each individual asset you may be wondering whether you should keep it all in one spot, or maybe keep some on a wallet, exchange or a hardware wallet that you just got in addition to a software wallet. Each option has risks and benefits.

Risks of One-Wallet Approach

The main risk to holding all your crypto assets in one wallet is that if you got phished and hacked, you would lose all your funds, whereas if you have them spread out, only that one wallet would be vulnerable. Related to that risk, is the risk that you lose your recovery phrase and forget your password, essentially creating a situation where you have not lost your funds, but you cannot get access to them. This is something that has occurred with Bitcoin wallets, especially in the early days of BTC as users did not take keeping their wallet recovery information seriously and subsequently there are millions of BTC locked away in wallets where users lost the keys.

The reality of those risks is that it is more so the fault of the user if any of that occurs, being vigilant and avoiding scams can be quite simple, and making sure you have your recovery phrases stored away safely will help mitigate any of the risks mentioned above.

Benefits of One Wallet

There are a couple benefits to holding all your cryptocurrencies in one wallet. The first of which is convenience. Having them all in one place, or even just your lump sum in one place, will save you time, and transaction fees, in addition to allowing you to more easily track your portfolio.

Another benefit is that if it is a proof of stake asset that you are staking to earn interest, having your stake pooled in one wallet will result in a higher return than if you spread it across multiple delegators, as you are entitled to a higher portion of the rewards. This varies by asset but is generally true of assets such as Polkadot (DOT).

In the end it comes down to whether you trust yourself to maintain the security of your wallet and assets within it. If you do, then there is not too much reason to spread out your assets other than for your own peace of mind but be sure to keep careful account of which wallet has what and the recovery phrases for each.

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About the Author

Evan Jones

Evan Jones was introduced to cryptocurrency by fellow CryptoVantage contributor Keegan Francis in 2017 and was immediately intrigued by the use cases of many Ethereum-based cryptos. He bought his first hardware wallet shortly thereafter. He has a keen and vested interest in cryptos involving decentralized backend exchanges, payment processing, and power-sharing.

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