According to Benzinga, you only have to trade three different cryptocurrencies before you become a great candidate for a crypto tracker portfolio.
That rule probably applies to most of the investors reading this.
If you’re anything like us on the Kubera team, you’ve got a dozen different digital crypto wallets and other crypto tools sprinkled across the internet and various software platforms — and maybe even a few physical ones tucked away.
It can be a lot to keep track of, especially as your crypto gains in value and as you continue to expand the rest of your portfolio outside of these holdings into even more alternative assets.
If you’re looking for a way to save time and sanity by consolidating your crypto and other financial assets without downgrading your portfolio diversification, this guide is for you.
Keep reading to learn all about:
- The main types of crypto wallets on the scene (digital, physical, and more)
- Kubera’s platform for tracking crypto wallets, cash, collectibles, and more side by side
- All the reasons why you may want, or need, to use multiple crypto wallets
- Why you should use Kubera to consolidate your various crypto wallets
3 Main Types of Cryptocurrency Wallets
A cryptocurrency wallet is a secure place where individuals can store the private keys that prove their ownership of different crypto holdings. Some even allow investors to send, receive, and spend their crypto. These wallets come in a few main formats.
Software wallets are intangible and accessed via the internet using software or a website. Many crypto exchanges have their own, but there are also freestanding hot wallet vendors. Aside from exchange wallets, mobile wallets and desktop app wallets are common types of software wallets.
These types of wallets are also called “hot wallets.” Hot wallets let you log in to an account to access your private keys and/or move your digital currency around. This convenience is their biggest draw. However, at the same time, this accessibility can make them more susceptible to being hacked.
Real Example: Using Exodus as a Bitcoin Wallet
Exodus is a real-life example of an individual vendor that provides hot software wallets (desktop and mobile apps) that allow users to exchange coins.
So if you use Exodus to store your private Bitcoin keys, you would be able to pop open their desktop or mobile app to access this information or participate in peer-to-peer trading of over 100 different coins.
Hardware wallets, on the other hand, are tangible devices where your private keys are stored. Most of these devices are small and portable, similar to a flash drive, and can be plugged into a digital device to connect with an interface where you can then access your information and trade crypto. Some even have a built-in interface from which crypto can be traded, completely skipping the part where they need to be plugged into anything at all.
They are PIN and password protected, so your keys remain safe even if you lose the device. A “seed phrase” allows you to re-generate your keys if you need to move them to a new hardware wallet.
Hardware wallets are also called “cold wallets” and are isolated from the internet. This makes them a little less convenient to use but also more protected from phishing, malware, and other attacks. This is what makes cold hardware wallets an ideal tool for holding large quantities of crypto.
Real Example: Using Trezor as a Bitcoin Wallet
Trezor is a popular hardware wallet company with several different cold wallets and accessories, as well as app- and web-based interfaces to securely access the info on these wallets.
So a Bitcoin investor, for example, would be able to use their Trezor wallet to spend, exchange, and buy coins simply by plugging it into a digital device and accessing the Trezor suite. As an added step of security, they would be able to use the built-in interface on the Trezor device to check that information like the address, amount, and more are all correct before completing a transaction.
It’s features like these, and their safe distance from the internet, that make hardware wallets like Trezor ideal for security-concerned investors as well as those with a lot of holdings to protect.
Paper wallets aren’t something we necessarily recommend using a lot, but since they’re not all that uncommon we do want to touch on them as an option for those interested in diversifying their wallet collection.
A paper “wallet” is simply a piece of paper with your private keys written on it. This is technically a form of cold wallet as it’s disconnected from the internet. So while paper is secure from cyber attacks, your information can easily be used by anyone who gains access to it. Any piece of paper with your private keys should be kept completely secure in your home or even locked away in a secure facility such as a bank.
Just getting into cryptocurrency? Make sure you read Investing In Cryptocurrency: The Beginner’s Guide for Late Adopters.
How to Track Multiple Crypto Wallets (And More) With Kubera
Kubera is an all-in-one crypto tracker that takes the tedium out of managing your crypto coins, wallets, and other assets — leaving you with more time to plan and act on your big financial goals.
Kubera is web-based personal balance sheet software built on custom architecture that empowers investors to connect with various financial accounts, from traditional banks to brokerages, crypto exchanges, and more. For a look at many of the worldwide financial institutions with which Kubera works, we’ve got a living list here.
Of course, that means Kubera also works with many popular crypto wallets and exchanges. You can learn more about which ones and see just how easy it is to add your wallet (or wallets!) here.
Once tracking in Kubera, your bank, brokerage, exchange, and other accounts will stay up to date with your transactions. This provides an extremely accurate view of your assets from a singular platform — making it much easier for you to see how your finances are performing, stay diversified, and make informed financial decisions.
Our unique crypto (and stock) tickers offer another way to monitor the value of crypto assets.
And any one-off accounts or individual holdings that don’t connect to Kubera’s automations can still be tracked — think real estate, physical collectibles, and so on! All you have to do is add the asset and its details, such as cost and value, into Kubera’s spreadsheet-like dashboard and keep it updated as those details change.
Other features include Kubera’s integrations with asset experts (EstiBot, Zillow, and more) that give you insight into and track the real-time value of assets like web domains and homes.
For our smart investors who we know want to do more than just visualize their portfolios, we’ve also built in a calculator that finds IRR for investments.
You just make sure the purchase price, value, cashflow details, and holding time are correct and we’ll automatically display the internal rate of return for even your alternative asset types.
Alongside that number, we’ll also provide benchmarks from top indices and tickers. With this information, you’ll be even more empowered to make the right call when it comes to which coins — and other assets — to hold and which to sell to reach your investment goals.
Now, how about an easy way to view changes and growth in all of the above?
For that, just turn to our Recap screen, which organizes all your data to provide a digestible view of net worth, asset value, and asset allocation changes over time — run daily reports all the way up to yearly.
Click here to see most of the above features in action and how Kubera works.
No matter how wide your variety of assets or just how many different crypto wallets you’re working with, Kubera makes it so that the accuracy of your financial overview and the future plans you build upon it never have to suffer.
Need more help choosing your best crypto management platform? Learn more about 4 Tips for Choosing the Best Cryptocurrency Portfolio Tracker.
Is It Normal to Use Multiple Crypto Wallets? (Hint: Yep!)
Don’t worry, it’s not odd for you to be working with multiple crypto wallets by any means. Here are some of the reasons you and others may be racking ‘em up.
Most Crypto-Specific Wallets are Not Multi-Cryptocurrency Wallets
As you may have discovered during your journey through investing in cryptocurrency, many or even most crypto-specific wallets don’t work with multiple different cryptocurrencies.
For example, Litecoin Core is a desktop app wallet that only stores Litecoin coins and tokens. So if you’re a Litecoin investor who has also branched out and purchased Ether on the Ethereum network, you’ll have to use a different wallet to manage keys and other information associated with those new coins.
Gain Access to Staking
Often, you won’t be able to participate in staking when using a multi-cryptocurrency wallet. Staking typically requires you to use a coin-specific wallet to enter the stake pool and then get rewarded with the same coins.
Create Savings and Checking Accounts of Sorts
Some involved investors don’t just have multiple crypto wallets for different types of coins, they even have multiple wallets for the same type of coin.
These can be used somewhat like savings and checking accounts are at traditional banks. You might designate one wallet, perhaps of the hardware variety, to be the “savings” wallet that you hardly ever touch. Your most valuable keys and information can live here. Then, you might connect a more convenient software or website-based wallet to an exchange — this is your “checking” wallet — only when you’re ready to buy or spend coins.
A two-fold system can help keep your private keys farther away from prying eyes while still enabling you to actually participate in crypto exchanging when the time is right.
Stay True to the Golden Rule of Investing: Diversification
Just like you can (and should!) diversify your investments in stocks, you can also engage in portfolio diversification when it comes to crypto.
Finance YouTube creator and long-term crypto holder Mark Farfan is an example of cryptocurrency diversification in action.
About 80% of Farfan’s crypto portfolio consists of what most people considered steady coins, like Bitcoin and Ethereum. But the other 20% is mostly “bets” on lesser-known coins including Cardano, Stellar, and so on. Because in the words of Money writer Mallika Mitra, “ … the more coins he bets on, the more likely to bet on one that takes off.”
And that’s true, but there’s another great reason besides “taking off” for diversifying your crypto portfolio.
Diversification also helps you keep from losing money even when parts of the market dip, because almost all of the time the entire market won’t take a huge dip at once. The more assets in which you’ve invested, the more you have to carry you through if one or even a few of them do take a nasty nosedive.
But in order to diversify, it’s likely that you’ll have to add several different crypto wallets to your long list of financial assets to track. Don’t worry, we’re getting to the part where we help you do just that.
Learn more about the value of diversification from our Modern Guide to Portfolio Diversification.
Create Security Through Diversity
A final reason why you might find yourself growing your crypto wallet collection is a big one — security.
Growing and diversifying the crypto wallets you use creates a kind of a “moving target” for attackers. If all of your coins are in one wallet and it’s hacked, it would be devastating. But if those coins are spread across a dozen different wallets, you’ll probably be able to bounce back if one is compromised in a security breach.
Should I Consider Consolidating Multiple Crypto Wallets?
We just got done telling you lots of reasons, benefits even, for using multiple wallets to manage your cryptocurrency.
So why would you even consider consolidating them?
We’re definitely not recommending you un-diversify your investments, but that you find a method for monitoring and managing all those diverse wallets and coins in a streamlined way.
Here’s why that can be beneficial to you.
Improve ROI by Learning from Patterns
Pretty much the only accurate way to see how your portfolio is performing is to track it using a singular tool.
Getting a clear overview of your entire portfolio — from stocks to crypto wallets to antiques and beyond — gives you insight into what kinds of investments are working, which moves didn’t pan out the way you planned, and other patterns.
Capitalizing on these patterns by following the trends that are working and ditching the ones that aren’t is a powerful way to actively grow your ROI, improve your net worth, and continue to create realistic financial expectations and goals.
Achieve More Effective Diversification
Getting all your crypto coins, wallets, and other assets under one roof might sound like the opposite of diversification, but it’s actually a great way to make your diversification efforts more effective. We’re not talking about storing them all in one platform, we’re just talking about taking advantage of a singular platform from which they can all be seen easily.
When you can see your assets in a single place, you can better understand how they’re working together. This will lead you to make smarter diversification decisions across asset classes, industries, and beyond.
Considering the rapid developments in the financial industry and the world events that have increased market volatility recently, it’s never been a better time to make sure you’re well-diversified and ready to take advantage of the peaks and ride out the valleys.
Peace of Mind
Honestly, a huge factor in consolidating multiple crypto wallets is just increasing your peace of mind.
How can you know how much of each coin you have — or worse, if they’ve been hacked and stolen — if you have so many different wallets to check on that you can’t keep up with all of them?
You can’t. And not only is it anxiety-causing, but it can also be really bad for your financial health.
We weren’t surprised to learn that 60% of people report quality of life improvements just from using wealth management tools.
We can certainly say the same has been true for us since building out our dream product — Kubera.
Keep Your Crypto Life In Order with Kubera
As individual investors ourselves, it’s important to us that Kubera makes sense as part of your budget and your financial life.
That’s why we offer affordable pricing.
Why not free like many other financial apps (claim) to be?
Because that would require us to sacrifice on our commitment to security and privacy in order to make money from advertising — something we’re not interested in annoying our users with!
In addition, we even offer an affordable white-label option for modern financial advisors.