Types of Cryptocurrency Wallets7/28/2020
Digital wallets or e-wallets are virtual storage of user’s payment and identification data for different payment systems. With digital wallets, you can streamline your buying procedures on dedicated services. They can equally be utilized with mobile payment systems. Crypto wallets are much more complicated compared to standard e-wallets. Besides, the numbers of cryptocurrencies keep growing on a day-to-day basis. To select a suitable option, therefore, you need to do extensive research. We have provided in this article a quick overview of 5 types of crypto wallet to make the task easy for you.
5 Cryptocurrency Wallet Types
1. Web/Online wallets
Web wallets run on the cloud. So you can access them on any device with an internet connection. They allow you to gain access to cryptocurrency blockchain straight from your browser without any download or installation. Web or online wallet constitutes both exchange wallets and other providers of browser-based wallet.
Some web wallet providers hold and manage your private keys which can expose you to risks of fraud. Some web wallets solve this issue by allowing you to manage your private keys either singly or through multi signatures. Try to check out the mobile wallet techniques before signing up for one.
- No download or installation required.
- They’re convenient and practical
- Risk of fraud and scam
- You can be exposed to phishing attacks
2. Mobile wallets
Mobile wallets work similarly to the desktop counterparts. However, they are specifically designed to work with smartphones as mobile apps. They are very handy and make it easy for you to send and receive cryptocurrencies using QR codes. Thus, they are great for daily transactions and payments. It’s best to encrypt and pass-word code the mobile wallet, and backup your private key so you don’t lose your fund if your phone is lost or broken down.
- They work best for real-life spending of crypto coins.
- Like PCs, the mobile wallet can easily be infected by malware. They can equally be affected by malicious apps and malware infection.
3. Hardware wallets
Hardware wallets are hardware or electronic devices that are used to generate and store private/public keys. The electronic device is mostly a USB drive. Because the keys are stored on the physical device, they are considered cold wallet, safer, and more secure. You can easily use them for the online transaction. Nonetheless, because they’re offline, you need to plug them to PC to use them.
- They are equally handy and work by plugging on an internet-enabled device.
- They’re the safest options.
- They are the best option for when you want to keep your crypto holding for a long time or when you have huge amounts of cryptocurrency.
- Although they may be safe from online attacks, that is only when you do proper firmware.
- They are among the most costly options.
- They are less user-friendly and the currencies in the wallets are more difficult to access compared to hot wallets.
4. Desktop wallets
A desktop wallet is a software that you download and operate on your local computer. As opposed to the web wallet, with desktop wallets, you have complete control of your private keys and funds. Anytime you generate a fresh desktop wallet, it is stored on your local computer as a "wallet.dat" file. The file holds the private key data you can use to gain access to your crypto address. Thus, you need to personally password-encrypt it.
You need to back up your wallet.dat file in a safe place. Another thing you can do is export the equivalent private key or seed phrase. This will allow you to access your cryptocurrencies on other devices if your PC stops working.
- They are safer than web wallets
- They may be affected by virus or malware if you and infested computer.
5. Paper wallets
A paper wallet is a piece of paper with a print of your crypto address and private key. They are normally represented as QR codes that are scanned to perform crypto transactions.
It is currently the safest way to store your digital assets. To send funds, all you need is to transfer the money to the public address of the public address and to send or withdraw your asset, you need to enter your private keys or scan the QR codes.
- With a paper wallet, you can download your code and generate fresh addresses and keys when you’re offline. His makes them safe from online hacking attacks. This way, they serve as a substitute for cold storage.
- With a Paper wallet, you can't send funds in part. You must send your entire balance. Your paper wallet is emptied after your primary transaction irrespective of the amount you send. Any change you have on the wallet is non-reusable.
There is a one-size-fits-all best crypto wallet for everybody. The best option depends on your need. So, you may want to consider the factors like the crypto coin you want to trade, your portfolio size and diversity, whether you want to engage in short-term or long-term trading and so o to determine the suitable fit.