Best Practices for Managing Multiple Wallets

There is an old saying: not to store all of your eggs in one basket. With cryptocurrency, this can become even more critical, especially as software wallets are easy to compromise, and losing a USB-sized hard drive can be devastating. But what are the best practices for managing multiple wallets?

Using management tools, encrypted shortcut files, and separating large accounts are only a few of the best practices. Read on to learn more about the best practices for managing multiple wallets.

How Many Wallets Should You Have?

Before we dive too deeply, you may be wondering just how many cryptocurrency wallets you should have. In general, we don’t recommend having too many, as this will make it even more challenging to keep everything secure. But you should, at a minimum, plan to split your largest balance in half—storing the bulk of your investment in two separate places.

Of course, while we assume your largest balance is a single currency, there is a chance you have another wallet with a different currency that isn’t compatible with the wallet for your main balance. In this case, you will likely have another wallet that you need to manage the password for.

We, overall, recommend diversifying when it comes to crypto, but we also recommend not diversifying too much. It is good to have a main cryptocurrency, as well as a secondary one to hedge, but beyond that, we recommend only experimenting with 1-2 more tokens, bringing the total tokens you are exposed to for a grand total of 4.

With this recommendation in mind, we recommend splitting your large balances into two for safety, leaving you with the possibility of having a minimum of 5 wallets and a maximum of 8, depending on your balances. We recommend that most of these be hardware wallets if possible, though 1-2 can be software wallets for large holders.

Of course, while 5-8 isn’t a massive number, it is still a large number of logins and passwords, as well as recovery seed phrases, so how do you manage all this private information safely?

How to Manage Multiple Crypto Wallets

1. Use a Management Tool

Similar to password managers, there are cryptocurrency wallet management tools out there. That being said, we recommend spending the time to research one you really and truly trust to keep your information safe, and still only storing a few of your passwords in one place, and others in another (we especially recommend splitting large balance wallet keys into separate locations).

In the process of writing this article, we couldn’t find a wallet management tool we trusted. Personally, we use a password manager and simply include the seed phrase in the notes section. We do use two separate password managers, however, keeping our large balances split, just in case.

2. Use Multiple Methods

Remember, just like you never want to rely on a single cryptocurrency, you also never want to rely on a single method for managing your passwords. Imagine entering all your information into one password manager, only for it to go defunct and for all your information to disappear into the ether. Scary, we know.

This is why, while a password manager can be a main method for storing your crypto wallet info, you definitely need at least one backup method. As we delve into the next few methods, ensure you keep a few in mind and consider using them both, or even picking a third method.

3. A Safe Deposit Box

While this is more common among the older generations, safe deposit boxes are still a good option for storing things, such as a piece of paper with a seed phrase, that you don’t want others to discover. Of course, like the other methods on this list, you’ll want to take the time to research a bank and its safe deposit box policies (for example, can anyone with the key access it? Or will they check identity as well?) before choosing one. You will also want to ensure it is a branch that won’t close anytime soon (requiring you to pick up your safe deposit box or risk it being sold) and that you have a payment method set up that won’t accidentally default and also result in the box being sold.

One recommendation from cryptocurrency millionaires is to split the seed phrase and store it in multiple safe deposit boxes at multiple banks. Of course, this does get expensive rather fast, but it is an option.

4. Store it on the Cloud

Above all else, when we were researching this article, we found many recommendations to store your password and seed phrase in the cloud. While this protects you if your device is lost or stolen, cloud security is still a developing industry, so we recommend approaching this method with caution.

Like the other methods on this list, storing your seed phrase in the cloud 100% means splitting it, so if one part is compromised, the other may remain safe. We recommend separate files with different passwords set to protect them, ensuring that one click won’t reveal all of your information.

We also recommend choosing a unique storage message, like two different pictures, as a file named “seed phrase” is a beacon for a criminal if he or she were to gain access to your computer.

5. Build a Wallet Map

By this point, you probably have a lot of notes, an idea of which wallets will be stored where, and with which passwords. We know this is a lot to track, so the final thing you should do is make a wallet map—writing it in a code that is not easily understandable (but not a cipher either) to ensure you can find the wallet you need when you need.

For example, if you have a password you remember for a certain reason, like when it was created, you can write “main wallet, password in manager, 2014” to give yourself an idea where the password is, as well as what password you need to access it. You can even take this further by shortening it as much as you can, like “M wallet, favorite bank, 2014” to indicate it is a wallet somehow associated with the letter M (for main, or MetaMask), that the seed phrase is at your favorite bank, which you set up in 2014.

Of course, there is still a risk if this map is compromised, but like everything else on this list, be sure to store it somewhere safe behind password protection.