Trading cryptocurrencies have gained momentum over the past few years. With more and more trading platforms coming into light the business for these platforms has also highly increased. However, it is highly responsible for an investor to choose the right trading platform like Bitcoin Method to not fall prey to any scams. People are not conscious and end up trusting the wrong platform and losing money. However, the right platform is the first step toward your crypto trading success.
Well! You have chosen the right platform, earning good money and then again investing it in crypto or buying digital currencies. But have you ever thought about how safe your cryptocurrency is? Your currency is only as safe as your crypto wallet? Don’t you agree? Be it paper currency or digital currency, you definitely need a good wallet to keep your money safe. If you are unaware of crypto wallets and want to know more information about them, then this article is for you. In this article apart from the crypto wallets, we will also discuss the types of crypto wallets that you should know about.
What are you waiting for? Let’s jump straight into the article then.
What is a Crypto Wallet?
A crypto wallet is virtual storage that stores your private keys i..e, the password that gives you access to your digital assets. Only through the private key can you send or receive payments. Are you wondering why are these so important? Well, the crypto wallets contain the most valuable information which is your private key details and without them, it is highly impossible for you to access your digital assets on the blockchain. There are many types of crypto wallets, from simple apps to complicated security solutions, in this article you will learn about the different types of wallets available in the market.
The first type that we are going to discuss is Mobile wallets. Mobile wallets are nothing but your smartphones. All you have to do is download an application on your mobile, set up an account and you are all set to go. This type of crypto wallet is considered safer than cloud wallets. Smartphones have become an integral part of a person’s life, so having a mobile wallet for your cryptocurrencies is more practical. The only risk associated with mobile wallets is that your digital assets will be in danger in case your mobile breaks down or undergoes a security breach.
An online wallet is also called a cloud wallet. You can access this crypto wallet from any device as long as you have access to an internet connection. These are also practical and convenient similar to the mobile wallet. It is uncommon for users to not carry digital devices when they are on move. From laptops to mobile phones, the users have something or the other at their disposal. The risk associated with online wallets is that they need an extra layer of protection in case they can be easily stolen or hacked.
The next wallet that we are going to discuss is the hardware wallet. These wallets typically store private key information on the USB drive with which users can make transactions. One of the major strengths of this wallet is that it is online only when performing a transaction the rest of the time it stays offline which in turn reduces the risk of being hacked. This wallet is compatible with different interfaces and is highly convenient as all you have to do is plug in the USB drive to send or receive payments.
A desktop wallet is another popular wallet choice that many crypto users prefer. This wallet is not to be confused with an online wallet. The online wallet is a cloud wallet that can be accessed from any device be it yours or other’s. However, a desktop wallet can only be accessed on your personal computer or laptop. Well! You have to install or download an app on your computer and access your digital assets from that application. The risk associated with the desktop wallet is that your private key information can fall into wrong hands in case your device is hacked or you lose your information in case of a virus attack or external damage.
Paper wallets are the safest option to save your digital currency. A physical wallet is a physical copy of your generated private or public key information. This wallet can also be referred to as a piece of paper. You will have to first send the funds to the wallet’s public address. Once you have funds in your wallet’s public address you can transfer funds by either entering the private key details or entering the QR code that is present on your paper wallet.
Hot Vs Cold
Which wallet to choose as your crypto wallet: hot or cold? Well, hot wallets are connected to the internet, the online, desktop, and mobile wallets are hot. Cold wallets are the ones that operate without the need for an internet connection, the hardware wallet and paper wallet are considered cold wallets. Cold wallets guarantee more security compared to hot wallets. However, if you save all your funds in the cold wallet then you will not have any funds readily available in case you are doing an online transaction. So the answer is to maintain a healthy balance between cold and hot wallets. Don’t save all your funds in one wallet. Use multiple wallets and save your funds more securely.
In a nutshell
As you have made it to the end of this article, you would learn about the different types of crypto wallets available. Well! Remember one thing, be it a cold or hot wallet, don’t download and directly set up an account without knowing the legitimacy of the app. You have to safeguard your funds as crypto scams are increasing at an alarming rate. Choose the wallets that are in alignment with your needs and save your funds securely.