Do you know how many types of cryptocurrency wallets actually exist in the market?
If you don't, there are high chances that you won't be able to choose a right wallet for yourself and as a result not able to store your crypto safely.
Let us also accept the fact that "one's cryptos are as safe as their wallets" and different types of wallets are to be used for different purposes at different times.
That's why in this write-up I want to tell you about different types of cryptocurrency wallets. However, if you are not familiar with wallets, read this:
Any type of wallet is simply a combination of your private key and public address. Based on how and where you store them, you can categorize your wallets in the following segments.
1. Hardware Wallets
Hardware wallets, as the name suggests, are hardware devices build specifically for handling private keys and public addresses.
It is a USB-like device with an OLED screen and side buttons to navigate through the interface of the wallet and comes with its native desktop apps for different cryptocurrencies. It is a battery-less device which you can connect to a PC or mobile device via USB even on an infected device.
A hardware device typically costs between $70-$150 but it definitely worth owning from the point of view of the safety of your cryptocurrencies. Most popular hardware wallets that now allow you to store more than 22 cryptocurrencies (including BTC) and +500 ERC-20 tokens are:
And lastly, needless to say, they are the safest way to store your cryptocurrencies.
2. Paper Wallets
Paper wallets are not for everyone because they are a tad bit technical and requires a high level of caution from the user. It is so because in a typical paper wallet you just print your private keys and public addresses on a piece of paper and start transferring your bitcoins or altcoins on it.
Needless to say, as it keeps your private keys offline, it is another secure way of storing your cryptos but not all cryptocurrencies offer paper wallets.
They are the second most secure way to store your cryptocurrencies.
3. Desktop Wallets
Desktop wallets for Bitcoins and cryptocurrencies are installable software packs that are available for most of the desktop operating systems such as Mac, Windows, Linux.
Any cryptocurrency that is serious about itself will launch their desktop versions of wallet on day one itself.
But as it is your desktop or laptop that often connects to the internet, you need to follow the basic security measures such as antivirus and anti-malware software and a strong firewall.
Currently, there are many desktop wallets available for Bitcoins and other popular cryptocurrencies that one should use instead of keeping their cryptos on exchanges.
Desktop wallets are the third most secure way to store your cryptocurrencies.
Mobile wallets for Bitcoins and altcoins are the most used wallets right now on the market and it is so because they are mobile-based and also easy to use.
For popular cryptocurrencies, you will find mobile wallets compatible with both Android and iOS and for less popular ones you can expect a decent Android version atleast.
But before trusting a mobile wallet, one should do the due diligence of it based on following factors such as:
Private keys – Wallets where you control your private keys.
Ease of use – Elegant UI for ease of use.
Development community – Active development community.
Backup & security – Backup and restore features.
Compatibility – Compatible with different operating systems.
Mobile wallets are the fourth most secure way to store your cryptocurrencies because they are always connected to the internet (hot wallets) and can be flawed by its development community itself.
Web wallets are hot wallets that are always connected to the internet and can be accessed via different internet browsers such as Google Chrome, Firefox, and IE etc by going to URLs such as https://xyz.com.
The private keys are held online in these kinds of wallets in your browser itself in some web wallets and they are also prone to DDOS attacks.
Web wallets are sometimes hosted wallets and sometimes non-hosted too, depending on what type of wallet you are using.
However, we always recommend you to use "non-hosted wallets" so that you can control your funds always.
They are the least secure type of wallets if you are using a hosted wallet because they are safe as long as they are not getting hacked or DDOSed.
Whats your Crypto wallet type?
I have deliberately listed down the different types of crypto wallets in an order moving from safest to less secure types of wallets.
But it doesn't mean only safest wallet should be used. It means one needs to understand the strengths and weaknesses of each type of wallet and use it accordingly.
So go ahead and enjoy this post and let me know your thoughts in the comment section below. Also, do share which type of wallet do you use the most and why.
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