Cryptocurrencies represent an incredible set of technologies, but starting out is often daunting. Buying and selling can still be a time-consuming and frustrating process, and then there’s the challenge of keeping your funds safe. Moving money around and building a diversified portfolio of cryptocurrencies poses another set of hurdles. Uphold takes the headache out of all of these steps with a secure, user-friendly digital wallet and multiple crypto and real-world currencies.
When bitcoin first launched in 2009, there was only one way to use it. You had to install a piece of software that would connect your computer to others in the network, download the blockchain – the entire database of bitcoin transactions – and interact with it to manage your wallet and send coins by typing requests using the command line tools. Later, a rudimentary graphical interface was created, and this ‘qt’ wallet still forms the basis of many cryptocurrency clients.
Today, comparatively few people use bitcoin in this way. The blockchain has ballooned to over 170 GB, and the demands of storage and bandwidth make it inconvenient to run a full node. Purists might insist on the old-school approach, but it’s just not possible for everyone. You need to make sure the computer running the node is very secure, so it’s not suitable for a laptop you take out and about with you, and you can’t make transactions when you’re on the move.
Cue the proliferation of ‘lite’ wallets and smartphone apps that connect to the network and allow you to hold your own private keys, but don’t require a full blockchain download. These are great for accessing bitcoins at any time, and they’re a good compromise, but they have their limitations too.
Firstly, you can typically only manage one currency at a time, so you’ll need to download many different apps if you want to hold several currencies. Secondly, there are several steps involved in moving money between different currencies – sending to an exchange, making the trade, and withdrawing to a new wallet, waiting for confirmations along the way. You will also need to back up your private keys safely since if your phone or laptop is lost or damaged, your coins are gone. There’s a certain technical overhead to all of this and you cannot afford to get it wrong.
Managed Digital Wallet
All of this has led to the rise of the managed digital wallet. These will hold your private keys for you, taking on the responsibility of keeping your coins safe. Trust becomes a greater issue, here: if the wallet’s security procedures aren’t fit for purpose, you can expect funds to disappear. This is what happened with MtGox and literally dozens of other exchanges in the years since: customers used the exchange as a wallet service as well as a trading platform, but their trust was misplaced. Users traded security for convenience and ended up paying heavily.
However, when a digital wallet service is built properly, it brings all the benefits of convenience, security and greater flexibility. A comprehensive digital wallet service such as Uphold offers the best of all worlds, as a combination of wallet, exchange/brokerage, and portfolio. This gives users a series of practical advantages:
This is a paramount concern in the crypto world, where loss of stolen funds cannot be recovered. Whenever you’re not holding coins in a local wallet, it’s vital that you can trust the service that has control of your private keys. Uphold keeps the majority of funds in cold storage. All reserves are transparently displayed so that anyone can check whether its crypto obligations are backed. Withdrawals require two-factor authentication, and the platform is registered with FinCEN as a Money Services Business. All of this makes it a trustworthy solution for storing crypto for months or years, as well as for short-term trading decisions.
Multiple currencies supported.
There are overheads to running any local crypto client in terms of hardware, resources, and know-how, but if you’re dealing with several different coins that can quickly get out of hand. Uphold supports a wide range of currencies, both fiat and crypto. Not only does it make them easier to hold safely, but it’s possible to switch between them almost seamlessly, simply by transferring funds from a ‘Card’ denominated in one currency to another.
All of this makes Uphold the ideal platform for portfolio management. Holding crypto is safe and easy. Moving money across currencies is similarly straightforward – which is ideal when you want to escape crypto’s famous volatility, perhaps sitting out of the market for a while without withdrawing funds completely. (When you do want to move money in or out of your wallet, close banking integration also makes that process simple.) Putting together a diversified portfolio of cryptocurrencies and fiat money is fast and painless.
Lastly, this isn’t just a place to keep some digital or regular cash. It’s a great way to hold funds for payments. You can send money to anyone else on the platform, in any currency, instantly and for free. If you need to pay someone in crypto who isn’t on Uphold, you can simply make a withdrawal for the required amount.
In sum: Fast, low-cost, versatile, secure, convenient. This is digital wallets should be at their best.
Thanks to Uphold Member, Guy Brandon, for contributing to our blog! If you are interested in contributing or sharing your Uphold story, just send us an email to [email protected]