5 Types Of Crypto Wallets You Should Know About
A crypto wallet is a means that you can use to interact with a blockchain network. There are various crypto wallet types that have in common the fact that they are all a combination of your private key and public address. Depending on their working mechanisms, they can give you more or fewer benefits for your specific needs.
In this article, we’ll walk you through the key information you need to know about crypto wallets as well as the differences between them 👇
What Is A Cryptocurrency Wallet?
A cryptocurrency wallet is basically a software that is used to stock private keys and public keys while making it easier for the user to manage their cryptocurrency resources. The benefit of a blockchain wallet is that users not only can store assets but, at the same time, send, receive, and monitor their cryptocurrency balances.
How Do Cryptocurrency Wallets Work?
Cryptocurrency wallets can resemble normal mobile banking apps, but the system behind them is completely different. Cryptocurrencies are based on blockchain technology. The blockchain is like a distributed public ‘book record’ that keeps an immovable track of transactions.
Thus, a cryptocurrency wallet is a series of private and public keys that authenticate the ownership of a digital asset, giving them the capacity to send and receive digital assets that otherwise would permanently reside on a blockchain ‘book record’.
Confused? Here’s a much easier way to keep in mind. You can think of your public key as your bank account. You can share it with people or businesses in order to send you money while the private key is kind of like the PIN of your debit card or the bank account password. This one should be solely known by you.
Cryptocurrency Wallet Types
Sometimes, online wallets can seem prone to hacks and cyber thefts, but that’s not the case. What is more, they’re very convenient and easy to access. Here are some types of the different types of wallets so you can take your pick.
1. Hardware wallets
Hardware wallets are physical, electronic devices that make use of a random number generator (RNG) to produce public and private keys. The keys are then stashed up in the device itself, which has no connection to the Internet. Thus, hardware storage is a type of the so-called cold wallet and is said to be one of the most secure types of crypto wallets out there.
A hardware wallet, thus, provides you with a secure way of accessing your assets due to the private keys that basically never leave your device.
You should consider using a hardware wallet if you are planning to have your crypto for quite some time or if you're in the possession of large amounts of cryptocurrency.
At the moment, most hardware wallets allow you to set up a PIN code to protect your device, as well as a recovery phrase which can be used as a backup plan in case your wallet is lost.
If you’re looking for such a type of wallet and don’t know where to start, you can trust Trezor for keeping your coins safe!
2. Web wallets
You can use web wallets to access blockchains through a browser interface without needing to download or install anything. This includes both exchange wallets and other browser-based wallet providers.
Most of the time, you can create a new wallet and set a personal password to access it. However, be aware that some service providers may hold and manage the private keys in your place.
This can be more useful for inexperienced users but it can rapidly transform into a dangerous practice.
3. Desktop wallets
As the name itself suggests, a desktop wallet is a software you download and execute everything on your computer. Compared to the web-based versions, desktop wallets give you full control over your keys and funds.
Once you create a desktop wallet, a file called "wallet.dat" will be stored locally on your computer. This file contains the private key information used to access your cryptocurrency addresses so it is recommended to encrypt it with a personal password.
Usually, desktop wallets are considered to be safer than most web versions, but it's crucial to make sure your computer is clean of viruses and malware before setting up and using a cryptocurrency wallet.
Here, we want to highlight SafeWallet as one of the best and safest choices.
4. Mobile wallets
Mobile wallets function much like their desktop ones with the difference that they are designed for smartphone use. These are quite convenient as they allow you to send and receive cryptocurrencies through QR codes.
What’s more, mobile wallets are particularly suitable for performing daily transactions and payments. Our obvious favorite is the SafePay Wallet, with a huge focus on security and is one of the most technologically advanced on the market today.
5. Paper Wallets
Unlike the up-mentioned types, paper wallets are not for everyone because they are more technical and they demand a great level of caution from the user. This is because in a typical paper wallet you just print your private keys and public addresses on a piece of paper and start transferring on it.
Also, as this type of wallet keeps your private keys offline, it is quite a secure way of storing your cryptos but be aware that not all cryptocurrencies offer paper wallets.
The key thing to remember here is that your paper wallet will be empty after sending its first transaction out, no matter the amount. So be aware that you won’t be able to reuse it later.
Bottom Line
Crypto wallets are an integral and important part of using most cryptocurrencies out there. They are one of the basic pieces of infrastructure that make it possible to send and receive funds through blockchain networks. As you could see in this article, every wallet type has its pros and cons, so it's vital to understand how they work before making any move.
Here, at Safe Trade, we are dedicated to ensuring security and privacy at sky-high levels. Feel free to contact us anytime. We’d love to hear from you.
