In the cryptocurrency world, there are different types of wallets that are used to store crypto assets or altcoins.
Why are wallets so important ?
Most crypto newcomers do not know this but keeping your crypto on an exchange is almost never a good idea.
Recently one of the biggest exchanges got hacked in mid-january 2019. After hacking the exchange immediately disabled transactions so whoever kept their cryptocurrency in there might get lost.
Want to know the full story check here.
If you are holding cryptocurrency for a long time it is good to store in a wallet or else you can lose your cryptocurrency if exchanges get hacked.
In this article, I’m going to talk about different types of crypto wallets so you can put your cryptocurrency in these wallets which is very safe and secure.
Table of Contents
5 Different Types of Cryptocurrency Wallets
Wallets are used to store your cryptocurrency, which contains a private key and a public key.
Private keys should be kept secret and take backups of it.
So now let’s start with the types of wallets in crypto:
- Hardware wallet
- Mobile Wallet
- Desktop Wallet
- Paper wallet
- Web Wallet
Hardware Wallets
Hardware wallets, as the name, suggests it’s a hardware device that will help you store private keys of cryptocurrencies.
As you see in the Image, hardware wallets look like a USB. These wallets are straightforward to use; you have to connect your hardware wallet to the computer. This device only performs send and receive functions. This is not used for buying or selling any cryptocurrency in theirs.
Hardware wallets are expensive, but it is worth storing your cryptocurrency because it is very secure, and no one can hack this.
Why is a hardware wallet safe?
- It is not connected to the internet.
- You control it.
- Third parties have no access to your Private key.
Exchanges are not safe, so it’s essential to have a hardware wallet. It usually costs you up to 100$. Buy hardware wallets from a reputed website link is given below.
Here are the best hardware wallets for you:
Mobile Wallet
Mobile Wallet is a mobile application that allows you to manage and store your coins on your smartphones. It’s straightforward and easy to do transactions of your coins within just a few clicks.
Mobile wallets have added benefits of portability and being more comfortable to access. All of you have smartphones anyway, which means they are also ideal for actually buying things at one click and check your balances on the go.
It’s very simple and easy to do transactions of your coins within just a few clicks.
So here is the four best crypto wallet for mobile apps:
- â–ş Coinomi
- â–ş Trust Wallet
- â–ş Atomic Wallet
- â–ş Exodus
Best mobile wallets for you will depend upon different factors like what coins you want to store.
All the mobile wallets mentioned above are very safe. Mobile wallets are still better than leaving your funds on crypto exchanges.
Desktop Wallet
Desktop Wallet is an application that can only run on a computer and laptops. Desktop wallets are installable on operating systems like Windows, macOS, Linux. All the desktop wallets connect to the internet.
Almost all the cryptocurrency has its desktop wallets which store only their coins.
Example: Ripple has its desktop wallets, which stores the only ripple (XRP). Similarly, all the coins have their desktop wallets, which you can get on their websites.
If you want to store all the coins in one desktop wallet application, here is the list.
List of 3 best desktop wallets
- â–ş Exodus Wallet
- â–ş Jaxx
- â–ş MetaMask
Paper Wallets
Till now, you have seen different types of crypto wallets like hardware, desktop, or mobile wallets. There is one more wallet called paper wallets.
So what is paper wallets?
Paper wallets are a piece of paper which have your private key and public key printed.
As seen in the above Image, paper wallets contain wallet addresses, private keys, public keys, or a QR code.
Paper wallets protect you from hacking because it’s not connected to the internet. It is usually used for long term holding of a coin. It can also be used as gifting.
You have to protect these paper wallets from getting damaged from water, link, fire. The best is to laminate your paper wallet.
How to use a paper wallet
You can send cryptocurrency by transferring the money to the wallet’s public address (public key). You can withdraw or send your currencies by entering your private address (private keys) or scanning the paper wallet’s QR code.
Web Wallets
Web Wallets are website-based wallets, which are also called hot wallets. Web-based wallets are contented to the internet so it can be accessed from different devices. It requires only a username or password to get access to the wallet.
The benefits of online wallets are buying and selling options on exchanges.
There are two types of web wallets: hosted wallets or non hosted wallets.
In the Hosted Web, Wallets funds are stored by a trusted third party.
Example:
- Coinbase
- Binance
In Non hosted wallets, there are different ways to store your funds.
Example:
- Myetherwallet
- Metamask
In conclusion, a non-hosted web wallet is quite convenient and just as secure.
Hot Wallet vs Cold Wallet
Hot wallets are always connected to the internet; you can access the wallet anytime or anywhere in the world. It is connected to your mobile and your computer or your laptop. Hot wallets are very much user-friendly; they contain regular user id and password.
If you look at security-wise, then the hot wallet is less secure compared to cold wallets.
Cold wallets are related to hardware where we store cryptocurrency. This makes hardware more secure because it is not connected to the internet, so hacking cold wallets is tough. Ensure you keep your cold wallet in a safe place and then take a backup of the keys so that you can access it even if it gets lost.
Cold wallets are made by third party companies which they sell online like nano, tezor, etc. Mostly these wallets are mainly used by holders which hold cryptocurrency for a long time.
These were the differences between the hot wallet vs. cold wallet.
The importance of taking backups
Taking backup is the most important thing to do for any wallets. Even if you lost a hardware wallet or lost the id password for web wallets, or else you clean your computer, you can’t access the desktop wallet.
The first thing you have to do is create a bat file or save a private key or public key in any file. Take multiple backups of the file; even if you lost one backup, you could still recover your wallets.
Even if you have a password encrypted, make sure you take a backup of the password because you can access your wallet fast enough in time of emergency.
Best crypto wallets or cryptocurrency wallets
There are different types of wallets that I have explained above. Now you know the types, you can choose the best wallets for you.
Here are the lists of best crypto wallets / Cryptocurrency wallets.
- Hardware wallets –
2. Mobile Wallets
- Coinomi: https://www.coinomi.com/en/
- Trust Wallet: https://trustwallet.com
- Atomic Wallet: https://atomicwallet.io
- Exodus: https://www.exodus.io
3. Dekstop Wallets
4. Paper Wallets
5. Web Wallets
- Coinbase
- Binance
- Myetherwallet
- Metamask
FAQ
What is an external wallet?
External wallets are third party wallets where you store your cryptocurrency.
What are custodial wallets and non-custodial wallets?
Custodial wallets are those wallets which are controlled by any third party companies like cryptocurrency exchanges.
Non-custodial wallets are not controlled by any centralized authority—examples of desktop wallets, mobile wallets, etc.
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