Can you invest in crypto wallets?
Every crypto holder needs a wallet to interact with their cryptocurrency, whether this is on a crypto exchange wallet or your own non-custodial wallet. Everyone needs to use a crypto wallet to invest in or use crypto. But can you also invest in these crypto wallets? And how would you invest in one?
Well to put it simply, yes you can invest in crypto wallets in 2 ways. Of which, one way is accessible to the average Joe like you and me.
Initial investment rounds
The more difficult way and exclusive way to invest in crypto wallets is through initial investment rounds. This is usually only accessible to big venture capitalists and people with lots of money. These investment rounds let them invest in the company that builds the crypto wallet. And in return, they will own a stake in the company. Meaning they thus control part of the company and will share in the profits.
For you and me this might not be accessible. But it is one way a lot of bigger money players get into the industry. By holding control of the companies that create the wallets.
Crypto wallet tokens
One other way to invest in a crypto wallet that is accessible to everyone is through crypto wallet tokens. These tokens represent certain things within the wallet and can be bought on crypto exchanges and DEXs. So buying crypto wallet tokens is also accessible for you and me.
Crypto wallet tokens can sometimes be bought as an asset or utility token on the open market. Wallets that started out with their own token have used the token sale sometimes as their initial investment round. Making the token holders often in control of the wallet.
If buying into these tokens your investment would be linked to the performance of the wallet. As the token prices will most likely increase with the number of users and usage of the wallet.
We have already listed some crypto wallet tokens here.
Use cases of crypto wallet tokens
Although crypto wallet tokens still have not reached the top of the cryptocurrency market cap, many can go up over time depending on their users and use cases. Below we have a small list of their use cases. But many of the wallets that have their own token also still actively looking for new features they could add to the token. So that the value of the token may increase in the future. With burning mechanisms and many other features still possible to be added to many of the existing tokens out there.
- Tiers – Giving extra features within the wallet for holding their token.
- Discounts – This can be on Trading/Swaps or anything else they charge a fee for.
- Purchases – Purchasing specific (digital) items.
- Airdrops – Often to promote a project in collaboration with the wallet.
- Sence of community – Just to keep the users more interactive with their product.
- Revenue share – Which often comes in a way of a token burn or an interest you can earn when staking the token. This lets everyone invest in the wallet and its future performance.
Do I need to invest in a crypto wallet?
No, not really. You can use any crypto wallet without having to invest in that wallet. Which should be how wallets operate. But some wallets do give you more benefits or use cases in the wallet if you hold some of their tokens. They do this to link the price of their token more to the number of users they have. But most wallets let you simply use their wallet for free. So you can decide for yourself to invest in it.
Holding tokens from crypto wallets or exchanges can benefit you in some cases like with NEXO, Coinloan, or Binance. Where you get more interest or a cheaper trading fee for holding their tokens. This works sometimes the same in decentralized non-custodial wallets. Making it so that the user sometimes receives tokens over time by using the platform. But whether or not a user keeps these tokens is totally up to them.
Does crypto still grow in your wallet?
Your cryptocurrencies can grow within your wallet. But not in form of dividends. Your Bitcoin and other cryptos could grow within your wallet in form of staking rewards, price appreciation, or interest earned from lending. So to make your Bitcoin grow within your wallet you would need to do something extra. All of these things like lending and staking always do come with a little extra risk. But can earn you some extra passive income on your tokens and coins.
Or the price of your crypto could appreciate over time. But no of that is guaranteed by anyone. So never put money into it that you can not lose. So to answer the question yes, your digital coins and tokens can grow in value within your wallet.
Are crypto wallets safe?
Yes, most cryptocurrency wallets are save. Except for cryptocurrency scam wallets. The security of your wallet however depends highly on you. You see most wallets use a decentralized non-custodial model. Which puts the responsibility of the assets fully in your control. Because of that reason, you will need to make a good backup. For when you would lose access to the wallet.
To protect yourself and your coins, you would have to focus more on the security of your computer or mobile, or other devices. You can do this with simple things like having a good virus scanner, a strong password on the wallet app, using a VPN, and not using untrusted websites. Besides all these things you could also educate yourself a bit on crypto scams. So that you will not fall for them as there are constant crypto scams going on on social media. And people keep receiving phishing emails from criminals that want to steal your coins.
But do not worry, this might all sound like a lot of work, but as long as you keep your computer safe and private it should not be a problem for you at all. As that is something you would probably already do on a regular basis to keep your online activity for yourself.
We hope that this blog has taught you something about investing in crypto wallets. If you still have any other cryptocurrency-related questions or topics you would want us to write about in the future. Feel free to give us a follow or reach out on our socials. So we can give you the best blockchain content all the time.