Whether you want to trade your desired cryptocurrencies or want to hold on to them for a significant amount of time before making an investment, having the right cryptocurrency wallet is imperative. You need to pick the wallet that suits your purpose the best so that you can reap the best benefits out of your cryptos. However, there are a number of wallets in the market to choose from.
And deciding on picking the one that suits your situation can be tricky. Therefore, it is essential to invest time in research and understand the different types of cryptocurrency wallets that there are in the market.
In this article, we shall look at the different types of crypto wallets and try to understand their dynamics and how they work. An understanding of the different crypto wallets shall help you in picking the right ones for your purpose and help you make the most out of your cryptocurrencies. Therefore, let us now jump right into the article before we digress from the topic.
Crypto Wallets- In a Nutshell:
Before we start discussing the different types of cryptocurrency wallets, it is essential that we address a common misconception about the same. Unlike traditional wallets, a crypto wallet does not actually store your cryptocurrencies. Cryptocurrencies are decentralized; which means that they are not stored in any one location. They are, in fact, stored in the form of transactions, in the blockchain. Therefore, crypto wallets are nothing but digital spaces that store your public and private keys.
Simply put, these wallets are like your bank accounts. The public key is the account number that others can have access to while making a transaction. The private key is your PIN that only you have access to, to unlock your cryptos.
The Various Kinds of Crypto Wallets:
Now that we have discussed what crypto wallets are and how they work, we shall look into the different types of cryptocurrency wallets.
Cryptocurrency wallets can be categorized into five broad categories. They are as follows-
- Online wallets
- Desktop wallets
- Mobile wallets
- Hardware wallets, and
- Paper wallets
One of the most convenient cryptocurrency wallets is the online wallet which runs on the cloud. This means that you can access your wallet from any corner of the world as long as you are connected to the Internet. However, the Internet is not a foolproof place. It is susceptible to hackers and cyber threats of sorts.
Therefore, one should never assume that the keys are safe on online wallets. Online wallets come with the disadvantage that your keys are not entirely in your control and are vulnerable to hackers. Another thing that must be known about online wallets is that they are mostly used by cryptocurrency exchanges.
The second type of wallet that we have is the desktop wallet. The desktop wallet is the safest kind of wallet that there is. This is because this type of wallet can be downloaded and installed on your desktop and can be accessed only through your computer. However, this does not make the desktop wallets impermeable to attacks. More often than not, our computers are connected to the Internet. This leaves enough opportunities for hackers to steal information from our systems. Therefore, though desktop wallets are safer than the other kinds of wallets, they can be hacked too.
Mobile wallets work in the same way as desktop wallets. However, the only difference is that these type of wallets are designed to function on your smartphones. There is a mobile phone on everyone these days. That is why little remains to be said that mobile wallets are the most convenient type of crypto wallet. They are extremely user-friendly and are designed in a stylish manner.
Plus, the keys of mobile wallets are usually stored in your smartphones, and this makes it convenient to use them. However, on the downside, hackers might also be able to steal your keys easily. This begs the question of security. However, if you had to choose any one type of wallet for your cryptocurrencies, mobile wallets seem to top the list.
The next type of wallet that we have on the list is the hardware wallet. If you want to store your cryptocurrencies for trading on platforms like Aurox, and want to use them in the long run, you need to opt for the hardware wallet. Hardware wallets do not store your keys on smartphones or computers.
Your keys are stored on hardware devices, and that is why they are the safest kinds of wallets. Plus, most of these wallets are designed to be safe even when they are connected to virus-infected systems. However, hardware wallets are not much user-friendly, and the price of these wallets is also a major drawback.
The last kind of wallet that we have is the paper wallet. As can be understood from the name itself, paper wallets store your private and public keys on print. They use QR codes to store these keys on print or paper. However, the features of these wallets are more than just literal. Paper wallets do not mean that your keys are only stored on print. They can be safely printed on plastic as well. And as surprising as it may sound, paper wallets are actually one of the safest kinds of wallets.
There are a number of crypto wallets found in the market. And the sheer number might make it a challenge to select the right one for you. That is why it is imperative that you do your research and learn all that you can about your wallets. That way, you shall be able to pick the one that is right for you!
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