One of the benefits of cryptocurrencies is self-storage away from intermediaries and third parties. Crypto assets, in general, let holders send their assets to compatible online or offline wallets, providing more freedom over holdings. This freedom, however, puts increased responsibility on the crypto asset holder to look after their assets and take proper precautions. 

Storing assets in a personal wallet, also called a self-hosted wallet, requires the user to keep track of information such as passwords and backup phrases in a private manner, all while remaining alert against scams or theft efforts. Moreover, wallets may differ with asset compatibility, physical makeup, or security features. This guide provides information specific to XRP wallets.

XRP, underpinned by the XRP Ledger (XRPL) blockchain, is a payments-focused crypto asset. XRP is the original digital asset on the XRP Ledger, which is permissionless, open-source and decentralized blockchain technology that can settle transactions in as little as three to five seconds. Ripple has asserted several times that XRP and the XRPL blockchain are independent of the Ripple company, although Ripple does utilize XRP and its blockchain in specific ways.

With an XRP wallet, users can access their funds and sign transactions using a combination of their private and public keys. The best wallet for a user will be determined by various factors, including their Bitcoin experience and anticipated investment size. 

For more on the company Ripple, read: What is Ripple? Everything you need to know

As a crypto asset, XRP can be stored in a number of different wallet types. This guide explains multiple routes XRP holders can take to store the coin. The coin runs on its own blockchain, however, so holders must make sure their chosen wallet is compatible with XRP. 

One noteworthy point is that all XRP wallets must hold at least 20 XRP, due to the way the XRPL runs. At least 20 XRP must be sent to a new wallet to activate that wallet on the XRPL, and then 20 XRP or more must stay in that wallet as a minimum balance going forward. The XRPL will not typically let you submerge under the minimum 20 XRP balance unless you delete that particular XRP wallet, which involves sending an “AccountDelete transaction” (if parameters, such as an XRP fee, are upheld), or if a portion of the reserve requirement is used on a transaction for fees. The 20 XRP minimum limit is also subject to change based on blockchain voting.

XRP holdings on centralized crypto exchanges are typically an exception to this minimum balance rule, however. Exchange users’ XRP is generally grouped and stored by exchanges in a smaller number of wallets on the backend of exchanges’ operations. The individual XRP wallets in which users carry their XRP transactions on centralized crypto exchanges work similarly to a layer-two solution, which does not directly interact with an asset’s corresponding blockchain all the time.

Types of XRP Wallets

A user can store XRP using various wallets, including hardware, desktop and mobile, exchange and paper wallets. Users must select the wallet that best matches their needs. For instance, if you're a first-time user wanting to buy or keep a small quantity of XRP, a mobile or desktop wallet will provide you with a good balance of security and ease of use. On the contrary, a hardware wallet may be preferred by a more experienced user. Let's look at XRP wallet types in the sections below.

Types of XRP wallets

Hardware wallets

Hardware wallets are a common digital asset storage method in the crypto industry. These devices essentially store the private keys to owners’ assets and let the holder interact with the wallet (sending and receiving) without exposing the private data responsible for keeping those assets safe. As XRP is one of the most significant crypto assets by market capitalization, several hardware wallets are compatible with the XRP coin.

These wallets store users’ assets offline — they actually store the private keys for those assets offline, but for simplicity, it essentially means storing users’ asset holdings away from internet connection — complete with recovery phrases if the physical device is lost. Recovery phrases sometimes go by other names, such as seed phrases. Recovery or seed phrases are specific strings of words that act as a way to manually restore crypto wallet holdings if the user loses access to their related wallet (assuming the wallet was not taken over by an attacker or someone else).

Malicious attacks are very hard to execute with hardware cold-storage wallets, which are dedicated USB devices meant to send and keep cryptocurrency offline. However, users must store their recovery phrases in protected locations, as those multi-word phrases can unlock related wallet funds. 

Wallet addresses have private keys, which gives the holder control over assets stored within those addresses. The recovery phrase provides the owner with authority over all private keys associated with that recovery phrase's related wallet. 

People or nefarious programs may attempt to trick hardware wallet holders into typing in their recovery phrases to steal related crypto holdings. For example, a hardware wallet owner might get an email that appears to be from a legitimate source informing the recipient of updates to their wallet’s software, urging the user to click on a link. Content on the linked site might then trick the user into typing in their recovery phrase as part of the process, leading to the loss of all related wallet holdings. For maximum security, recovery phrases should be kept private, such as writing two to three copies of this backup phrase using a pen and storing the different versions in separate locations. Ensure that no one is able to witness you doing this and do not store your recovery phrase online where it could be more vulnerable to a remote attack.

Desktop and mobile wallets

A desktop wallet may serve as another storage option for XRP holders. Desktop wallets are programs or apps downloaded from the internet to store and manage crypto assets via an interface. Writing down the wallet’s recovery phrase and storing it in a safe and private offline location may provide a backup method if the device where the desktop wallet runs is damaged. Caution is advisable when choosing and downloading wallet software due to viruses, fake apps, or other nefarious efforts that may exist to steal holders’ crypto. One such instance could involve an XRP holder clicking on a website link disguised as a legitimate wallet provider, except with a slightly different website address. The XRP holder might assume that they are setting up a new wallet after downloading software from the fake site. However, the scammer might already have the address that is included in the fake downloaded wallet version. This would result in the scammer receiving any funds sent to that address.

Similarly, mobile wallets run on users' mobile devices with interfaces for managing digital asset holdings. Using a mobile wallet is simple, and while it is not the safest option, it is a viable option for users wishing to acquire and store small quantities of XRP. Once again, safely recording the wallet’s recovery phrase can be a vital part of security.

Exchange wallets

An exchange wallet is a place for storing cryptocurrency on a digital asset trading platform. Many crypto exchanges also host XRP trading, and therefore can also serve as a location for XRP storage. Each asset on crypto exchanges has its own wallet location. Because of the way crypto assets function on the blockchain, they have related wallet addresses for transfer that require each asset to have its own holding place. Having distinct wallet locations on crypto exchanges also likely helps with asset organization.

Crypto trading platforms, however, come with pros and cons when used as a digital asset storage option. For instance, users do not generally need to worry about keeping track of and storing their recovery phrases. However, password management and two-factor authentication (2FA) are vital in protecting against account theft. Password management essentially means having a system for protecting and storing important information, such as account login details and recovery phrases. Two-factor authentication (2FA) involves a second layer of security after logging into an account. After entering a name and password, 2FA requires a second code for account entry. The code can come in several forms such as an ever-changing number from a synced mobile application. Two-factor authentication is typically a setting that can be set up.

Exchanges also generally have customer support teams, whereas self-crypto storage essentially puts onus strictly on the user. Self crypto storage comes with greater freedom in terms of asset movement and control, while centralized crypto exchanges can control asset transfers, account usage and access. Additionally, centralized crypto exchanges can act as a type of jackpot for hackers, potentially yielding significant rewards due to the substantial hack versus multiple individual wallet hacks. 

Protecting passwords and using 2FA can help guard users against individual account hacks, although if a party attacks the whole exchange’s backend, then individual security will not help. For security reasons, holding significant asset amounts in personal wallets off exchanges may be of benefit in this regard.

Paper wallets

Paper wallets essentially hold crypto-asset details on a piece of paper, as the name implies. Using this kind of wallet involves an asset holder making a new wallet via specific websites and printing out the essential details on a piece of paper. The holder would then store that piece of paper in a safe place. Important paper wallet details generally include a wallet address to which funds can be sent, as well as a private key. Nonetheless, using paper wallets may leave users susceptible to phishing efforts and other avenues of asset loss based on the way paper wallets function. 

Paper wallets require users to input their private key to send funds. A phishing effort is an illegitimate site, platform or otherwise, disguised as something legitimate with the goal of stealing users’ private information. Since sending funds from a paper wallet requires the input of private keys, users may be tricked more easily. However, certain other wallet types rarely require users to input recovery phrases or private keys, so those scams may appear easier to spot. Before making a paper wallet or sending a transaction, be sure to thoroughly research the intended website. Keep yourself up to date on crypto industry security measures and practices.

Other inherent downsides of paper wallets are that they are not as physically durable as other wallet forms. Paper wallets also list the wallet’s related private key, which, if exposed, can lead to loss of funds. 

Paper wallets can also be more clunky to interact with, requiring the input of the related private key when sending assets stored via that wallet, which can be a risky endeavor due to the existence of computer viruses, phishing efforts, or other related issues. Paper wallets often come with QR codes, making the process easier but not necessarily safer.

Once a holder inputs a wallet’s private key to send funds, they may want to send all related funds elsewhere and scrap that wallet, as that key has now been typed into a location that may or may not have been secure in the long run. For example, you never know who or what is monitoring your website activity, and that entity could be able to obtain your private key once you have entered it to send a transaction. 

Regardless of the storage method, knowledge and understanding are crucial for safe XRP storage. Learning how to send and receive XRP, knowing crypto security practices safely and researching reputable products are components of effectively managing and interacting with XRP.