Types of Crypto Wallet – Ultimate Guide

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In this article we are covering everything you need to know about Crypto Wallets and What are Public and Private keys in the Cryptocurrency ecosystem. Before we move further to know about Types of Crypto wallets. It is very important to know ‘What is Crypto Wallet’?

What is Crypto Wallet?

Crypto Wallet is a private key storage tool and public address. It is an application or software that stores, sends, and receives your cryptocurrencies in a few steps like other wallets you use. When you buy Cryptocurrency like Bitcoin and Ethereum it gets stored in what’s called a wallet and has a private key associated with it.

what is crypto wallet

So, It is very important to have a good crypto wallet to protect your investments, But when you decide to choose them choose the best one because a crypto wallet can be hacked and you can lose your investments.

Today we will tell you about the types of crypto wallets that you can choose and store your private key.

What are Public And Private Keys?

Public and Private keys are used to access your cryptocurrency. For example, if someone sends you cryptocurrency through his wallet, he must authorize the ownership of the cryptocurrency he owns in their wallets to yours via keys. 

Public Keys – Public Keys are like your regular Bank account Number that can be used to receive coins, and they can be shared with everyone. Your public key does not reveal your identity. That is why blockchains are considered as ‘Pseudonymous’.

Private Keys – Private keys are like a Password with a long string of numbers and letters attached to your wallet. If you want your coins to stay safe, you need to keep the private key safe, and you should always keep it as confidential as you can. 

NOTE – Never share your Private Keys with anyone. 

TYPES OF CRYPTO WALLET:-

There are usually Two Types of Crypto Wallet Hot Crypto wallets and Cold Crypto Wallets. Hot crypto wallet is connected to the Internet to access the private key and Cold Crypto Wallet do not need internet access to get Private keys.

types of crypto wallets

There are a few different types of Crypto wallets to store your crypto, the easiest way is to write on the exchange where you bought it. Exchanges such as Coinbase, Coin Switch Kuber, Wazir x, etc. 

These exchanges allow you to buy, sell and manage your crypto right on their platform. With these exchanges, they hold on to your private key and you don’t have access to that means you need to trust the company to keep it safe.

Just like you would need to trust any online company with your data, you should not store large amounts on the exchange because so much data breaching is happening in crypto wallets.

Hot Crypto Wallets

Hot wallets are connected to the Internet to access the private key, And it will be less secure as compared to cold wallets. Hot wallets are usually used for daily transactions because it is easy to set up and quickly accessible.

People usually store a small percent of investments in it as it is less secure as compared to cold wallets.

EXAMPLES OF HOT CRYPTO WALLETS:-

Desktop Wallet – The Desktop crypto wallet can be installed by the software. Only you have to download it and use it. This should be prevented with an antivirus because your system needs to be connected to the internet to access it. 

It is the third most secure way to store your crypto assets and better than online wallets as it can be downloaded and installed on a single computer and the funds related to an account can only be accessed to that computer/Laptop. It offers the advantage of ownership of your private key. Regular Backup of the computer is important to protect your keys and funds.

Example – Exodus, Armory, Multibit, Bitcoin Core, Atomic, Electrum, etc.

Pros –

  • More secure than Online wallets
  • Third most secure way to store your crypto assets

Cons –

  • Regular backup is a must to project data
  • Difficult to carry and access the keys and funds
  • Antivirus is required to protect data
  • Less secure when connected to the internet

WEB WALLETS – Web wallets are also known as online wallets. The best example you can take is as Metamask wallet, It’s a browser extension where you can send ETH transactions. These wallets are accessed by internet browsers that’s why it is the least secure wallet and prone to DDOS attacks. These wallets can be accessed from any location with a device, your password, and a web browser.

Web wallets are of two kinds: Hosted and Non-Hosted Wallets.

Hosted Wallets – You don’t have access to the private key

Example – Binance, Coinbase, CEX.io, etc

Non-Hosted Wallets – You can control Private Key/seed word 

Example – Metamask, MyEtherWallet.

We recommend you use Non-Hosted wallets as you can control your funds from them.

NOTE: Wallets provided by Cryptocurrencies are basically web wallets.

Pros –

  • A Fast and convenient way to complete a transaction
  • It can manage multiple cryptocurrencies
  • Good to hold a small number of cryptocurrencies
  • Good for always on the go
  • Quick and Fast transactions

Cons-

  • Have to have good Antivirus to protect your assets
  • DDOS projection should be used
  • Use secure Internet
  • DDOS Risks from hackers

MOBILE WALLETS – A Mobile wallet is installed in a mobile device like any other app you download, similar to desktop wallets. They are convenient and can be used on the go.

The Best thing is that they have a feature where you can use your Mobile crypto wallet to pay for the goods you buy in any store where cryptocurrencies are accepted.

Example:– Jaxx Liberty, Coinomi, Mycelium, Muun Wallet, and the popular Coinbase mobile app.

Pros-

  • Easy to use on the go
  • It has an additional features like QR Code scanning
  • Safer than Online Wallets

Cons

  • Vulnerable to malware and Viruses
  • If you lose your phone, you lose all your data

Cold Crypto Wallets –

Cold wallets do not need internet access to get Private keys. Your Keys are kept offline. It doesn’t require internet connectivity, it is stored offline that’s why it is more secure than hot wallets. No internet No online Hacks less risk.

It works in conjunction with compatible software on the computer. Cold wallets are mainly used by long-term HOLDers.

EXAMPLES OF COLD CRYPTO WALLETS:-

Paper Wallets – Don’t make it complicated. A paper wallet is nothing more than a physical copy of your private keys. You can create one by writing your private keys on physical paper. It is very easy to use.

Also, there are some paper wallet generators where you can create the private keys and print them along with a QR code. It is most secure as it is never connected to the Internet. 

Pros –

  • very Secure
  • Hack proof

Cons –

  • Paper wallets can be destroyed and you lose your crypto assets.

Hardware Wallet – Hardware Crypto wallet is one of the safest crypto wallets ever. Don’t complicate things and see it as a USB drive.

Hardware wallets are more secure than other of types crypto wallets in the market. Because your crypto assets are stored offline, that’s why it is inaccessible to hackers and more secure. Your private keys are in hardware wallets are protected with a PIN and optional passphrase.

ledger-nano-X

Also, In case your wallet is lost you can recover it by a Seed Phrase also known as the recovery phrase, It is a list of words that regenerate your private keys. By using the seed phrase you can move your private keys to a different hardware wallet.

It looks like A USB or Flash Drive with an OLED screen with buttons.

Example Ledger Nano X, Trezor Model T, Cobo Vault

Pros

  • Safest storage wallet for cryptocurrencies
  • It Can be used to store a large number of cryptocurrencies without worrying.
  • It won’t be connected to the internet so Hackers can access it.
  • Good to store your private keys or cryptocurrencies.
  • Convenient and safe to use.

Cons-

  • Always buy from a genuine wallet provider.
  • Much Costly.
  • Avoid third Party crypto wallet distributors.
  • It can be lost, stolen, or Physically damaged.

Some Important tips to make your Crypto Wallets Secure :

  1. Don’t store your large amount of cryptocurrencies for a longer time.
  2. Use Genuine Wallets whether its Hardware wallet or any online, web, or desktop wallet.
  3. Protect the seed words you get when creating a crypto-wallet as they are the only thing that can recover it. Make backup as sometimes seed words are the only thing that can be used instead of a password.
  4. You should know the basic level of Computer knowledge to get familiar with the new kind of financial ecosystem.
  5. If you are using Hot Wallets be sure to create backups of your private keys or online assets regularly.

It is very essential to know about the types of crypto wallet as it is the only thing where you store your crypto funds or private keys. The better you know the better you choose.

However, This is a detailed overview of the types of crypto wallet, How it is used?, and their Pros and Cons. But eventually, You have to decide which crypto wallet is good for your needs. And always be updated regarding the crypto wallets, if you don’t want to lose your data.

Must Read – 11 Best Ways To Earn Bitcoin For Free

1 thought on “Types of Crypto Wallet – Ultimate Guide”

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