by Salma Abdellaoui
Just like physical money for which you need a bank account to store it, you also need a place to store your digital money. As you might have guessed, a crypto wallet can be compared to a bank account where you get to send, receive and store your crypto money, but where you have a lot more control over and which isn’t riddled with paperwork when wanting to open or close one. More technically speaking, a cryptocurrency wallet is a software that stores your private and public keys while interacting with various blockchain and enables you to send and receive digital currency and monitor their balance.
Having this definition in mind, we can now think of the different types of wallets there are out there. This article will give you an idea about the various digital wallets available and allow you to make a clear distinction between them.
1. Web wallets
As their name suggests, these are website based online wallets that store your private keys on the server of a company providing such services. They are practical and convenient, enabling their users to access their funds on-the-go from any device connected to the internet. However, they are also more susceptible to theft and often require extra layers of security. You got it, they are not the safest way to store large amounts of money, but they are still very useful when it comes to storing small amounts that you’re going to use in the near future.
2. Mobile wallets
Mobile Wallets are apps on your smartphone. They are very handy since they allow you to pay for things directly from your phone. Moreover, some apps enable users to use their smartphones’ near-field communication feature, which means they can simply tap their phone against the reader, without having to provide any information at all.Since mobile wallets are online wallets, they carry similar risks as compared to web wallets - attackers can gain access to your wallet using coercive means.
3. Desktop Wallets
Desktop wallets are built to be installed and run on desktop computers and laptops, storing your private keys on your hard drive. They are known to be more secure than mobile and web wallets as they don’t rely on third parties for their data and are harder to steal. However, if your computer is infected with a virus, gets hacked or experiences external damage, there is a chance to lose all your funds.
4. Hardware wallets
Hardware wallets store your private keys in a hardware device (usually a USB drive). This has major advantages over standard software wallets, one being private keys are often stored in a protected area of a micro-controller. They also can’t be transferred of the device in plain text. They are able to make online transactions. However, most of the time they are offline and that is one of their strengths. Various manufacturers make hardware wallets compatible with different web interfaces. Therefore, complete characteristics depend on wallets integrations. Hardware storage is also convenient because of its ability to send and receive currencies by merely plugging them into the internet enabled device and authorizing yourself. Therefore, hardware walletis the most expensive, but also one of the safest options.
5. Paper wallets
Paper wallets are often used by those who wish to keep their crypto money safe and offline, in the most physical form possible. They are by far the safest option to store your digital assets. A paper wallet is a physical copy of your generated public and private keys and can even refer to a printed sheet of paper. You can send funds by transferring the money to wallet’s public address and you can withdraw or send your currencies by entering your private keys or by scanning the QR code on the paper wallet.
6. Digital wallets and security
When talking about digital wallets’ security, several aspects are to be considered in the equation. First of all, we have to know the difference between hot and cold wallets. While Cold wallets are more secure since they are not connected to the internet (hardware device, paper wallet...), Hot wallets are more susceptible to theft, but their connection to the internet makes them more practical and convenient. Thus, when storing your digital assets, you shouldn’t keep all of your eggs in a single cold or hot basket. A healthy balance between the two is keeping the long-term funds in a cold wallet and ready to use funds in a hot one.
It also has to be noted that security levels depend on the wallet that normally are designed to be secure but on different levels. That is why you should add layers of security yourself and be more cautious, (i.e. Use a different browser to access your online wallet, make sure to update your software frequently, back up your wallet etc… )
Concluding, we can say that the availability of these diverse wallet types is related to the fact that different users seek different ways to store their crypto money. Hence, one should be aware of his goals and priorities when choosing the right type (or types) of wallet. In other terms, with the many options available for your coins, you need to think in terms of performance, security, accessibility and convenience when choosing a specific wallet.