When most people think of cryptocurrency, they imagine it as digital money that can be stored on a phone or computer. While this is technically true, there is more to cryptocurrency than meets the eye. Cryptocurrency wallets are essential for anyone looking to invest in digital currency because they provide a way to store, receive, and send funds. There are two types of wallets: hot wallets and cold wallets. In this article, we are going to discuss the different types of crypto wallets including their pros and cons, their and safety precautions to take when handling crypto wallets. Let’s begin.
What is a hot wallet?
A hot wallet is a cryptocurrency wallet that is connected to the internet. Hot wallets are convenient because they allow you to quickly send and receive cryptocurrencies. However, because they are connected to the internet, they are also more susceptible to hacks.
What is a cold wallet?
A cold wallet is a cryptocurrency wallet that is not connected to the internet. Cold wallets are considered to be more secure than hot wallets because they are not vulnerable to hacking. However, cold wallets can be difficult to use because you cannot access your cryptocurrencies without connecting your wallet to the internet.
Hardware wallets
Hardware wallets are one type of cold wallet. They look like USB drives and can be plugged into a computer to access your coins. The main advantage of a hardware wallet is security. Hardware wallets are offline and therefore cannot be hacked. They are also very easy to use, as all you need to do is plug in the device and enter your PIN. The main disadvantage of a hardware wallet is that if you lose your device, you will lose your coins. Another downside is that hardware wallets can be expensive, costing around $100 or more, and they may not be compatible with all cryptocurrencies.
Paper wallets
Paper wallets are another type of cold wallet. They look like physical bills and can be stored in a safe or security deposit box. Paper wallets are one of the simplest and most affordable types of cryptocurrency wallets—paper wallets are free to use. However, they are also one of the least secure. This is because paper wallets are easy to lose, and if someone finds your paper wallet, they can easily access your funds.
Desktop wallets
A desktop wallet is a cryptocurrency wallet that stores the private keys for your coins on your desktop computer. Desktop wallets offer one of the highest levels of security; however, if your computer is hacked or infected with malware, your coins could be stolen. Additionally, if you forget or lose your private keys, you will lose access to your coins.
Mobile wallets
Mobile wallets are cryptocurrency wallets that store the private keys for your coins on your smartphone. Mobile wallets offer a high degree of convenience, as you can easily access and transact with your coins while on the go. However, mobile wallets are generally less secure than other types of wallets, as they are often targeted by hackers. Additionally, if you lose your phone, you will lose access to your coins.
Web wallets
A web wallet is a cryptocurrency wallet that allows you to store, send and receive digital assets via the internet. Web wallets are easy to use and can be accessed from anywhere in the world. They are also usually free to set up.
Because web wallets are stored on a server managed by third-party companies., they are not as secure as some other types of wallets. Hackers may be able to gain access to your web wallet if they hack the server where it is stored.
Examples of wallets
Specter
Specter is a open-source desktop wallet that supports multiple currencies including Bitcoin, Ethereum, Litecoin, Dogecoin, Zcash, Dash, and Bitcoin Cash. The wallet boasts features such as the ability to connect to your own full node for added security as well as being able to trade directly from the wallet interface. It is one of the few wallets that allows users to hold their private keys offline, which makes it more secure than many other wallets. In addition, Specter offers a number of features that make it convenient to use, such as support for multiple accounts and addresses, and an easy-to-use interface.
Muun
Muun is a mobile wallet that also supports multiple currencies. It uses onion routing to improve privacy, and is a non-custodial multisig bitcoin wallet which means that you control your own private keys. This also means that if Muun were to ever shut down, you would still be able to access your bitcoins. The Muun team is composed of experienced developers who have worked on projects such as Lightning Network and Blockstream Green. In addition, Muun integrates with various exchanges so you can easily buy and sell Bitcoin and other digital assets directly from the app. Muun's interface is designed to be simple and user-friendly, making it a good choice for those new to cryptocurrency.
Sparrow
Sparrow is a hardware wallet that stores your private keys on a physical device and supports over 30 different cryptocurrencies. With Sparrow, you can easily manage your balance and transactions with just a few clicks. The user interface is straightforward and easy to use, even for first-time users. And perhaps best of all, Sparrow offers free quality customer support in case you need assistance.
Nunchuk
Nunchuk, is a multi-currency non-custodial wallet that supports more than 1,000 different assets. It also features a built-in exchange so you can easily swap between currencies without having to rely on a third-party service. Nunchuk also offers an extensive range of security features, including 2FA and fingerprint authentication.
Safety precautions when using a crypto wallet
When it comes to crypto wallets, safety is key. Here are some safety precautions to take when using a crypto wallet:
1. Don't store your private keys on an exchange. Exchanges are a hot target for hackers. If you must store your keys on an exchange, use a 2-factor authentication method such as Google Authenticator.
2. Use a hardware wallet whenever possible. Hardware wallets are the most secure way to store your private keys. They're offline and immune to hacking attempts.
3. If you use a software wallet, make sure it's a reputable one with good security features. Also, encrypt your wallet and never store your password or recovery phrase in plain text.
4. Never share your private keys with anyone, not even a trusted family member or friend. Keep them safe and secure at all times.
5.Regularly back up your wallet in case of data loss or corruption.
6.Be cautious of phishing scams. Unfortunately, there are people out there who will try to scam you. Always counter check the web address you use when making any transactions.
7.Don't store large amounts of currency in a single wallet.
8.Use a strong password for your account.
When it comes to storing your cryptocurrency, there are a few different options available – but one of the most popular is using a crypto wallet. Crypto wallets come in many different shapes and sizes, but they all essentially do the same thing: store your digital currency so that you can use it later. There are many different types of cryptocurrency wallets, each offering its own set of advantages and disadvantages. So, which wallet is right for you? If you are looking for convenience, a hot wallet may be the better option. If security is your main concern, then a cold wallet is probably the better choice. Ultimately, it all depends on your individual needs and preferences.
This is a companion discussion topic for the original entry at https://insights.blockonomics.co/cryptocurrency-wallets-101/