There are many types of crypto wallets which one to choose?
There are many types of crypto wallets that enable you to store and access your digital currency. Crypto wallets can be broken down into three distinct categories
Hardware, Software and Paper…
Hardware Wallets are physical devices that are portable, and have a high level of security. Software wallets are apps that can be installed on a desktop, mobile devices (such as android or iPhones), in addition these can also be online within a browser or on an exchange. Paper wallets are physical objects that are not digital (just like a bank statement). Its up to you to keep these safe. Please see below a bit more information about what these options give you.
are different from software wallets. Hardware wallets store a user’s private keys on a hardware device like a USB. Hardware wallets are offline devices which makes them more secure as they can be isolated from the internet. You only connect the hardware wallets to the internet when you want to receive or send a payment. Equally it is useful to view your account as well as add and remove a cryptocurrency from your device.
Hardware wallets have the ability to have more than one currency on it, as well as being compatible with many different web interfaces. To send or receive a payment, typically you connect your device to a computer that has access to the internet. Once plugged in, you would enter a pin to access the hardware wallet and then again for the compatible GUI, (its secure) this is a middleware device if you will, to parse the transaction on. Hardware wallets are a secure way of transacting whilst keeping your money offline and away from scammers, hackers and fraudsters.
are downloaded and installed on your laptop or PC. You can only reach them from the single computer in which they are installed onto. These types of crypto wallets offer a better level of security, but if your computer is hacked or gets a virus its possible that you could lose your cryptocurrency. On the positive side, if the desktop wallet is a node (a copy of the full block chain) you are also contributing to the decentralisation of the crypto currency by verifying everyones transactions for that particular coin.
are used by downloading an app to your phone specific to the cryptocurrency you wish to use. The advantage of mobile wallets is that they are portable, and can be used anywhere that excepts the currency you have (eg. stores and restaurants), and can also be sent to colleagues, friends and family very quickly. Mobile wallets are a more optimised and scaled down version of a desktop wallet. Most individuals only have a limited supply of cryptocurrency on their mobile wallets for convenience, and will transfer funds from their hardware wallet or hot wallet, as and when needed for security measures.
are run in the cloud in realtime, and you can login to them from any computer and in any place that has a connection to the internet. The advantage is that it is really quick and easy to access, but the downside is that your private keys are held by a third party which has custody over your assets (like a fiat bank). This also has the disadvantage of them being hacked and stolen.
are easy to use and provide a great level of security. These types of crypto wallets are in fact a physical printout of your public and private keys. The software you use, will generate the addresses which will be printed out onto your paper wallet. You can then keep this secure within a safe, safety deposit box, or hidden away somewhere secret.
When you want to spend the funds you need to type in the keys back from the paper wallet and onto a software/desktop wallet. There are two ways, either manually type the address, or sometimes there is a QR code you can just scan. The only downside is that the paper wallet can be thrown away accidentally, damaged by fire or water. If you lose this paper wallet and you have no backup, you have lost your funds forever.