When we talk about wallet, perhaps you start to think of your leather wallet that keeps all kind of your precious possessions. From your cash and credit cards to your family pictures. But in the world of cryptocurrency the terms of wallet get use differently. In the crypto world we use digital wallet.
Cryptocurrencies don’t exist physically. So, technically they can’t be stored same as traditional currencies. Basically, they store data on a public ledger called blockchain and users can have access to their assets or transfer it by using private keys and public keys. In fact, a cryptocurrency wallet is a program or software that connects the user to the blockchain network.
There are different types of wallets which use to store cryptocurrencies. Each wallet has different features and provide different level of security and accessibility. It depends on your choice to which wallet suite you and you prefer to use.
In this article we are going to introduce and explain the different types of wallets exist in crypto world.
Mobile wallet is an app that runs on your smartphone and hold your private keys. It allows users to pay for things directly from their phones, so it’s a suitable choice for those actively using cryptocurrencies to pay for goods in shops or trading them face-to-face. Furthermore, some apps have near field communication feature, it means that users can just tap their phone against the terminal and the transaction gets done.
Mobile wallets are easy to use and you can have access to your asset anytime, anywhere, but they provide less security in compare to other wallets like desktop or web wallets. If someone gain access to your mobile device then you will lose control of your wallet and your asset is prone to get hack.
There are a variety of mobile wallets out there, which are accessible from app store or google play store. Each wallet provides different services and has its own features.
web wallets are kind of hot wallets. They store private keys on a server, which is constantly online. Users can have access to their assets through any device that is connected to the internet. As we mentioned, the private keys on these wallets keep by the third party and store online. So, it’s essential to use a strong password for your online web wallet and also use the wallets which provide two factor authentication (2FA). Do your own research and choose popular wallets with good reputation.
Desktop wallet is a software that get downloaded and installed onto your computer. Unlike web wallets that store private keys online the desktop wallets store your private keys on your hard drive. So, it makes them to be more secure in compare to web and mobile wallets. This type of wallet is suitable for those who trade small amounts of cryptos from their computer.
Digital Wallet; Paper Wallet
Paper wallets referred to as cold wallet are a document that printed in the form of QR-codes. A paper wallet contains a public address for receiving Bitcoin and a private key to spend or transfer Bitcoin stored in that address. You can simply scan the QR-code to add the keys to the software and make a transaction.
The keys in paper wallet store offline so, no malware or any viruses can attack the wallet and it’s completely immune to hackers’ attacks. Paper wallet is the safest way of storing high amount of Bitcoin unless you don’t keep the paper in a secure place.
Take note that a valuable and private information is printed on the piece of a paper so, you need to protect it carefully. Some people prefer to do laminating and store it in a safety box.
Digital Wallet; Hardware Wallets
Hardware wallets are types of cold wallets that store private keys in a hardware device. It’s one of the most secure way to store high amount of Bitcoin. The private keys store offline on the device so it cannot get attacked by hackers. In most of hardware wallets the software is open source and its immune to computer viruses. Although paper wallets must be imported to software at some point, hardware wallets can be used securely and interactively.
Same as other types of wallets, hardware wallets also have different features. Some has a screen that use to verify and display important wallet details. For example, it can be used to confirm the amount stored in the wallet, generate a recovery phrase or even confirm the amount of payment you wish to make. You can secure your funds and assets by choosing a device made by reputable and trustworthy manufacturer.