In our weekly 'mailbox' we answer readers' questions:

Q: Have there been any success stories in private equity crowdfunding? It would be nice to know there’s a pot of gold at the end of this rainbow.

A: There are plenty of success stories to be found in equity crowdfunding.

The most well-known case is Zenefits, a human resources software company. It listed on crowdfunding platform Wefunder in early 2013 and raised $372,000. In July 2013, it had a valuation of $9 million. According to The Wall Street Journal, it’s now worth $2 billion. Crowdfunders are on track to make 222X their stake in the company.

Wefunder has other big winners, including Checkr, an automated background screening and driving records company. Wefunder’s records state that Checkr has made more than a 34X return for its crowdfunders.

In fact, Wefunder says that 11 out of the 119 companies that have raised on its site are now worth more than $100 million. If you want to call them “pot of gold” companies, I won’t argue.

Wefunder’s companies also show an internal rate of return (IRR) of 41% from 2013 to 2016. (IRR is an annualized return rate that includes investments that haven’t been cashed out yet.)

That not only is much better than what the Nasdaq and Dow did during the same period but also is nearly three times better than the record of the top 25% of venture capital firms. And 81% of these crowdfunding companies are still active.

I’m citing Wefunder because it does a great job of tracking the progress of companies that have raised on its site and then making those numbers available to the public. Just this year alone, we’ve recommended two startups from Wefunder to the members of our First Stage Investor research service. But Wefunder is just one of a half-dozen portals (including MicroVentures, SeedInvest, Republic, StartEngine and Netcapital) that find high-caliber startups that want to raise money through crowdfunding. These other portals also have plenty of success stories to share.

Just recently, one of our recommendations was bought by a much bigger company at a generous markup to the price our members paid. Another has plans to list on a public exchange in the next few months. And several more have indicated to me that their price has gone up between 2X and 5X since we recommended them.

Even better, the quality of crowdfunding deals available to investors is improving, which means the potential returns are looking more and more promising. It’s still early. Yet startup crowdfunding has proven more than capable of giving investors generous returns.

And it’s only going to get better.

+ Early Investing Co-Founder Andy Gordon

Q: How do crypto wallets work? And which wallets are the safest?

A: There are five primary types of wallets that can hold cryptocurrency. There are pros and cons to each.

Hardware wallets – These physical devices are arguably the safest way to store crypto. The primary benefit of a hardware wallet is that you can disconnect it from the internet and eliminate the risk of being hacked (this is called cold storage). The primary hardware wallet brands are Ledger and Trezor, both of which put out high-quality products. Be sure you buy directly from the manufacturer to ensure you don’t get a device that has been tampered with.

Software wallets – Software wallets exist on your computer or phone. These offer a convenient way to store smaller amounts of crypto. For bitcoin (BITCOMP), I like the Electrum Bitcoin Wallet. For Ethereum-based assets, Balance.io has an excellent product. (Disclosure: We recommended Balance.io to members of our First Stage Investor service.)

Exchange wallets – Crypto exchanges, such as Coinbase, offer users a convenient way to store coins. For beginners and nontechnical folks, this can be a good option. Just make sure the exchange you store with has an excellent security track record (like Coinbase).

Online wallets – Blockchain.info and MyEtherWallet offer online wallet services. This option can be convenient but is recommended only for advanced users.

Paper wallets – A paper wallet is simply a piece of paper on which you write down your private and public keys. Be sure to make multiple copies, laminate the paper and triple-check the numbers. Some people go so far as etching their private keys into metal plates for long-term durability. Paper wallets are one of the most secure options available, as long as they are stored responsibly.

No matter which wallet solution you use, the important thing is to employ good security practices. Use strong, unique passwords for each account (especially your email and exchange accounts!). Keep written lists of passwords in two secure locations. Never click on any links or email attachments that are suspicious, and never download anything without confirming that it is legitimate.