Cryptocurrencies are not like most traditional currencies where you use physical money, and a bank account to store it.
But one thing is similar and required to store your cryptocurrency somewhere.
This place is called “Wallet”
A cryptocurrency wallet resembles, in two things:
– Your bank account which lets you send, receive and store bitcoins.
– It holds the private key that permits you to access your bitcoin address.
There are different types of cryptocurrency wallets that cater for different requirements.
It is important to remember the cryptocurrency wallets can be classified as either hot or cold.
What’s the difference?
A hot wallet is online and connected to the Internet while a cold wallet is offline and disconnected from the internet.
Generally, “hot” wallets are easier to set up and access however this makes them more susceptible to hackers and other technical vulnerabilities
A “cold” wallet is not connected to the internet is more secure thus is recommended for storing large amounts of cryptocurrencies.
Think of it this way, a hot wallet is the pocket wallet that you can bring anywhere. While your cold wallet is like your bank vault that is too valuable that you can actually bring everywhere.
So there are several different types of cryptocurrency wallets catering for different needs in terms of security, convenience, accessibility and so on.
One is a paper wallet. These are printed documents that contain a public address and a private key.
The public address is used to receive cryptocurrency. The private key, on the other hand, allows you to spend or transfer cryptocurrency stored at that address.
The main advantage of a paper wallet is that the keys aren’t stored digitally, anywhere, which makes it resistant to hacker attacks malware and basically any sort of digital theft.
The hardware wallet is a unique cold storage type of cryptocurrency wallet that stores the user’s private keys in a storage hardware device is the most secure way of storing any amount of cryptocurrency. Since they are offline and it generates the keys on the device.
Another is a desktop wallet.
This is designed to be downloaded and installed on laptops and personal computers for storing your private keys on your hard drive.
The desktop software gives you complete control over your coins.
Meaning you don’t have to trust a third party to lose or steal them
if you are actively using cryptocurrency on a daily basis. Then the mobile wallet might be for you. A mobile cryptocurrency wallet is an essential tool that runs as an app on your smartphone. Storing your private keys and allowing you to buy for things directly in your smartphone, but note.
Despite being on the go solution for cryptocurrency storage, mobile wallets are very prone to hacker attacks online. Wallets are the the simplest to use among all differing types of hot wallets.
Generally, you can access your Cryptocurrency from any device if you have the right passwords and internet connection. There are third-party wallet service companies that permit you store your private keys.
The wallets on these platforms allow their users to access their funds on the go.