What Are The Different Types Of Cryptocurrency Wallets?
Updated: May 15, 2021
In our last post, we tried to understand the concept of a cryptocurrency wallet and how they work, so to extend on the same topic, we thought it will be great if we dig a little deeper and learn more about cryptocurrency wallets.
From the previous post, we already know that cryptocurrency wallets are software programs that store your private and public key and interface with different blockchains, which allows users to send, receive, monitor, and do other operations on the cryptocurrencies. There are various types of cryptocurrency wallet that provides a different way to access, store, and perform operations on your cryptocurrency. There are three different categories of crypto wallets - hardware, software, and paper wallet.
Hardware wallets store the user's private key on a USB-like hardware device. Hardware wallets are considered very secure because they make it possible to easily do transactions while keeping your cryptocurrency offline and safe from the danger of online hacking. All you have to do is simply plug your hardware wallet device into any internet-enabled device, enter your pin, and perform your desired transactions. Hardware wallets are usually compatible with various web interfaces and can support multiple currencies.
A paper wallet is an offline mechanism for storing cryptocurrency like bitcoin. Paper wallets were quite popular in the early day of cryptocurrency but are almost obsolete now. In simple words, a paper wallet is like a printed piece of paper that contains QR codes and keys that are used to execute a crypto transaction. Paper wallets were long considered to be more secure than other methods of storage because they were removed from the internet but later found to have their own vulnerability like losing, misreading, and damaging of the paper wallet which led to its obsoletion.
Software wallets are the most common wallets used by people all over the world for storing cryptocurrency. Software wallets come in three interfaces - Desktop, Mobile, and Web (Online).
Desktop: Desktop wallets are basically computer software that is used by downloading and installing on a computer or laptop. Desktop wallets are considered very secure because they are only accessible from the computer in which they are installed.
Mobile: Mobile wallets are basically mobile apps that can be used to do the transaction in cryptocurrency. The main advantage of the mobile wallet is that you can use it anywhere, all you need is your mobile phone.
Web/Online: Web/Online wallets are powered by the cloud and are accessible from any device which makes them super convenient to access. But online wallets are controlled by a third party and store user's private keys online which makes them more vulnerable to online hacking and theft.
How Secure Are Crypto Wallets?
The level of wallet security depends on the kind of wallet you are using and the service provider providing it. Online wallets are a little risky place to store your crypto when compared to offline wallets. Online wallets can expose your funds if the wallet platform used by you is hacked. Despite all the scenarios of security lapse, it's mainly you who have to be smart and aware of your wallet because no matter which type of wallet you use, losing your private keys will lead you to lose your money. Therefore always take precautions while using crypto-wallets. A few of the things that you can do to improve security are back up your wallet regularly, update your wallet software regularly, use wallets that have good reputations and always add extra security with an added method like 2-factor authentication.
Which Cryptocurrency Wallet Is Good For Me?
There are so many options for crypto wallets available in the market, but before choosing a wallet, you need to understand your cases and how you are going to use them. Are you going to use your wallet just for holding crypto or for daily transactions?. Are you going to use your wallet from anywhere or just a confined place?. Are you going to store a single cryptocurrency or several currencies?.
To give you a better understanding of the market options you have, here are some of the most popular cryptocurrency wallet available at the moment:
Coinbase is already a well-known name among the crypto community for its great trading platform. Coinbase offers insurance policies to all the cryptocurrencies stored by the users on the server. It has nice user-friendly that is pretty easy to understand. Coinbase wallet can store more than one signature and support two-factor authentication for improved security. Overall, the Coinbase wallet is arguably one of the most popular crypto wallets in the market right now because of the features and credibility it has.
Bread Wallet is simple and easy to use, a mobile app-based wallet for sending and receiving bitcoins. It offers a standalone client, which means there is no server to use while sending or receiving bitcoins. One of the main advantages of the bread wallet is that you are always in full control of your fund all the time. The wallet can be downloaded from the App Store or Google Play. In totality, Bread Wallet is a simple and quite secure wallet for storing your crypto.
Ledger Nano S Wallet
Ledger Nano S Wallet is one of the best crypto wallets in the market. It is a hardware wallet that offers quite unique features and is very portable. It looks like a USB device and provides reliable security for crypto transactions. It is also known to be malware-proofed and can run multiple applications simultaneously. Ledger Nano S Wallet is quite popular among crypto miners because it allows them to collect rewards and send or receive funds.
In totality, it is a very secure, versatile, credible, and simple crypto wallet.
The blockchain wallet is very much similar to the coin base wallet. It allows crypto users to send or receive crypto directly in mobile apps. Blockchain wallet supports cryptocurrencies like Bitcoin, Ethereum, Bitcoin Cash, etc. Just like Coinbase, the blockchain wallet also supports 2-factor authentication for improved security.
Mycelium wallet is a mobile-only bitcoin wallet. Mycelium wallet is known for its "bank-level security" for its mobile application. It is known to be a little complicated to use especially for new users, but if you are a well-versed user you might be ok with it.
This list is merely the starting of the crypto wallet landscape available at the moment. There are way more options to choose from, all you have to do see understand your need and find the option that matches your requirement.
We hope that this post has provided you with enough information about the cryptocurrency wallet landscape and enticed you to explore more about them.
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