February 23, 2023

Benefits Of Having A Multicurrency Crypto Wallet

Benefits Of Having A Multicurrency Crypto Wallet

As cryptocurrencies and related assets get more popular, we’re seeing a larger fintech sector. New digital wallets are helping holders to manage what they purchase and trade. They’re a critical, central tool in a space that is still evolving and being defined.

Among different kinds of available cryptocurrency wallets, multicurrency crypto wallets are especially useful for a number of reasons. It's convenient to co-locate different kinds of coins and tokens and even keep fiat money in the same wallet with cryptocurrencies.

Here are some more benefits of using a multicurrency crypto wallet for modern financial transactions.

What is a Multicurrency Crypto Wallet?

A multicurrency crypto wallet is a digital wallet that allows for holding more than one kind of digital asset. That starts with being able to keep cryptocurrencies from different blockchains in the same wallet. These wallets can accommodate storage for BTC and Ethereum, Litecoin, and other altcoins like Solana or Dogecoin.

Why hold more than one cryptocurrency? One reason is related to high transaction fees for non-fungible tokens (NFTs) minters. In the early days of the NFT, most who were building their own collections for sale just used ETH for minting. But the ‘gas’ fees on this blockchain became prohibitive, so enterprising creators started to use other blockchains, such as BSV and Solana. That means there’s a need for multicurrency wallets to facilitate this kind of strategy. Beyond that, it’s just good to be able to hold multiple coins as stores of value. Experts talk about “arbitrage,” as an example, where traders just leverage the momentary value of the coin by selling into another crypto. Then there’s the process of staking with crypto lending strategies where holders can earn a lot of interest in a short time frame.

In addition to holding multiple cryptocurrencies, some of these cryptocurrency wallets can handle digital forms of fiat money too, such as the U.S. dollar. Why not keep your dollars right next to your BTC?

Some traders might also choose to keep stablecoins in their wallets. Stablecoins are cryptocurrency tokens that are pegged to the value of a fiat currency.
Along with crypto and fiat currencies, some wallets allow the keeping of NFTs and other unique assets that represent today’s “tokenized” economy. In other words, people are using digital tokens to represent all sorts of value, like a piece of real estate. The best forward-thinking wallets reflect those trends, too.

Multicurrency Crypto Wallets Simplify Diversification

Even in traditional markets, diversification is a common mandate from experts. People with a lot of knowledge about markets recommend diversifying portfolios due to the volatility and the threat of market changes. The opposite of diversification is “keeping all of your eggs in the same basket.” That means that a single holding in one equity or cryptocurrency or other asset can be rapidly devalued if that market changes. By contrast, a diversified portfolio can better withstand the changes that happen over time. Being able to keep all of these different assets in one digital wallet helps with organization and efficiency.

To be clear, keeping different assets in the same wallet isn’t “putting all of your eggs in one basket.” The “eggs” here are the values that you sink into something, whether it’s BTC, a national currency, an NFT, or a commodity. The wallet is just the storage container. So experts will suggest that holders should buy all of these different things and hold them in one place all together, where they can be collectively counted and analyzed.

Multicurrency Crypto Wallets Provide Better Security

There's also a security benefit to this kind of consolidation. The portfolio is still, as noted above, diversified – the person can hold all sorts of different coins and money – but there's only one secure destination for all of these assets, so they're not scattered over a number of different locations. The asset holder doesn't have to wrangle many passwords and digital systems in order to collect all of his or her value and manage it comprehensively. It's all there in that one single repository. No more Post-it notes on the desktop with all of the individual codes and private keys to be overlooked, lost, or misunderstood.  

This also provides a thinner attack surface for hackers and other malicious actors. The more different wallets you have as asn asset holder, the more vulnerabilities can apply.

Crypto Wallets Allow Real-Time Tracking

This is another neat feature of crypto wallets – that they can facilitate the kinds of tracking that show asset holders at a glance what's happening with different currencies, either fiat or crypto.

There are actually two main kinds of tracking that are helpful and can be integrated into multicurrency crypto wallets. One type is transaction tracking – showing the pathway of a trade or a buy or sell order to show how that transaction gets resolved in a decentralized finance environment. The second one is portfolio tracking, and this demonstrates how valuable it is to look at changes in value in extremely volatile markets.

Suppose someone has two or three or five cryptocurrencies in the same wallet. This demonstrates their overall holdings – their portfolio. The value of this portfolio changes rapidly, minute by minute, even second by second. It's dependent on the underlying values of each of these cryptocurrencies, and so the more types of money you have, the more values change in real-time.

But without a good real-time tracking system, there's no efficient way to keep tabs on the overall value of your cryptocurrency portfolio.

We know that cryptocurrencies can gain or lose value quickly. Portfolio tracking can inform an individual’s trading strategy to help avoid loss.

Easier Access and Faster Transactions

Multicurrency crypto wallets also offer better on-ramps for cryptocurrency purchases, making it easier for newcomers to get started.

One of the basic strengths of cryptocurrency as a whole is that there's less friction in transactions. People don’t have to verify their accounts with banking institutions every time they make a trade. There's quite a bit more freedom in the cryptocurrency world. Multicurrency crypto wallets complement that, with the ability to mix-and-match assets that you may be looking to acquire, hold, or sell.

Those are some of the benefits of a multicurrency crypto wallet that provides a lot of the infrastructure for crypto markets and other related markets. In general, these platforms allow people to pursue a new form of digital bartering free from the restrictions of traditional banking transactions.

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