Should I keep all my Crypto in one Wallet?

As Bitcoin and the entire cryptocurrency space slowly but surely gains popularity, more and more people are investing in digital assets like Bitcoin, Ethereum, and others.

One important consideration for cryptocurrency investors is how to store their digital assets securely. One frequent question is — “should I hold all my crypto holdings in a single wallet, or spread them across multiple wallets?“

While there is no one-size-fits-all answer, it is crucial to consider the advantages and disadvantages of each approach.

Storing everything in one wallet 📱

The “Put all your eggs in one basket, then carefully watch that basket” approach.

Simplicity

Keeping all your bitcoin/crypto in one wallet can be more convenient and straightforward than managing multiple wallets. When using wallet trackers, this approach can be easier for keeping track of your holdings and monitoring the performance of your entire crypto portfolio.

Easier backups and recovery

By having only one wallet to manage, backup management is far easier due to you only needing to back up one wallet — hence only needing to write down(or preferably, backup on steel) one set of 12-24 words.

Tip: use steel backups to prevent your backups from being destroyed by fire or water damage.

Storing everything in multiple wallets 📱📱📱

Security

Keeping all your crypto in one wallet increases the risk of losing everything in case of a security breach or theft. If someone gains access to your wallet’s backup, they can easily transfer all the funds out of that wallet.

When using multiple wallets, your potential losses are lessened due to your funds being spread out.

Having to need multiple hardware wallets

If you’re using a hardware wallet (which you should if you want to make your crypto investments as secure as possible), you’re going to need to buy multiple hardware wallet devices to be able to comfortably access multiple cryptocurrency wallet backups.

But if you have the money to spare and want to go this path anyway, fortunately — Ledger has discount bundles for when buying multiple hardware wallets.

What we recommend 👍

We recommend using 2 wallets — a hardware wallet for your cold storage(which will hold 95%+ of your funds), and a mobile wallet for holding the funds that you use for your daily spending.

This is the exact same setup that most people use with their local currencies — they use their bank for most of their money, while they use a leather pocket wallet(or a payments app like PayPal, CashApp, Venmo, etc) for their daily needs.

As with the security issue of potentially losing everything from your cold storage in a single single hack or scam, the trick is to simply use a hardware wallet — which will heavily decrease the chances of you getting hacked and scammed and to be aware of the most common cryptocurrency scams.

Learning how most cons and trickeries work is still the best way for your cryptocurrency holdings (or investments in general outside the cryptocurrency space) to be not-stolen.

Once you’re using a hardware wallet and at the same time aware of how most scams work, you’ll be virtually impenetrable.

Hardware wallets

When using a hardware wallet, your wallet’s private keys are stored on the hardware wallet device, and don’t leave that hardware wallet device.

Hence, even if your device gets infected by malware, your private keys are still safe as long as your backups are only stored offline using paper or steel.

Conversely, if you only use a mobile or computer app as your wallet (or worse, a cryptocurrency exchange), once your device gets infected by malware or once your exchange account gets hacked, the hacker can easily steal your funds clean — leaving you with nothing and with extremely low chances of getting your money back.

If you want to take a deeper dive into bitcoin and cryptocurrency wallets — learning what each wallet type’s advantages and disadvantages are, you can refer to our article here.

Final thoughts 📘

As with wallet security or cyber security in general, there will be a lot of things that are going to be subjective. Just make sure that you clearly understand the pros and cons of both approaches before making a decision.

If you want to take a deeper dive into cryptocurrency security in general (which you should), you can check out our other articles on our homepage.