A guide on cryptocurrency wallets

Any user that wishes to dabble in cryptocurrency needs to have a secure and safe means of storing their digital assets such as tokens earned from airdrops. This is one of the first steps you need to take before procuring any form of cryptocurrency token. A cryptocurrency wallet is a digital wallet that is used to hold and store digital currencies on blockchain networks. The wallets provide you, the user, with the tools to interact with a blockchain by generating the necessary information required to send and receive cryptocurrency. There are several types of crypto wallets based on their forms and working mechanisms. Crypto wallets are categorized into Hot and Cold wallets according to their mode of operation.

 

 Hot Wallets

Wallets in this category are those that run on devices with a connection to the Internet. These wallets are provided by crypto platforms and quite easy to set up and use. Making use of hot wallets is a more convenient option for traders and regular users because it is a much more accessible option.

 

Cold Wallets

These kinds of wallets are different from the hot ones in the sense that they don’t make use of a connection to the Internet for storage purposes. Cold wallets make use of a physical medium for offline storage of digital assets. This storage method is a safer and more secure alternative with higher resistance to online hacking.

There are other types of crypto wallets based on their structure; basically, they are divided into Software wallets, Hardware wallets, and Paper wallets.

 

Software Wallets:

Just as the name implies, these kinds of wallets are software programs that allow you to access a Blockchain through an interface and, in most cases, a connection to the internet. These wallets fall under the category of hot wallets; the most important types of software wallets are desktop, mobile, and web wallets.

• Desktop Wallets are software packages you can install and execute on the operating system of your desktop device. These versions of wallets can be used to store Bitcoins and any other form of crypto tokens locally on your desktop. You have full access and control over the digital assets stored on your desktop. As a precautionary measure, it is recommended that you install antivirus and anti-malware software for the security of your holdings. Bitcoin Core and Exodus are examples of desktop wallets available for users.
• Mobile Wallets are pieces of software you can install on your mobile device for sending and receiving crypto tokens. QR codes are used for making transactions on this form of wallets, which is quite easy and convenient for users. Encrypting your mobile wallets and also making a backup of your private keys is advised as measures to safeguard your assets. Electrum and Coinomi are established mobile wallet platforms you can make use of.
• Web Wallets are available on web platforms which you can access through the use of an Internet connection and a browser interface. This wallet option doesn’t require any additional piece of software to be downloaded and installed. Famous examples are exchange wallets and other wallet providers that are accessible through a browser. This kind of wallet is the least secure because they are susceptible to attacks and thefts but the chances of that happening can be reduced by making use of the protection tools on the wallet platform.
  
   

Hardware Wallets

These kinds of wallets are hardware devices that make use of a Random Number Generator (RNG) system to create and handle keys and addresses, whether private or public. This option provides better security when it comes to storing and protecting your crypto assets. You can make use of this option when planning on holding large amounts of digital tokens for a very long time.

 

Paper Wallets

This unique form of wallets are pieces of paper onto which private keys and public addresses are imprinted. Your digital assets can be transferred onto the storage information on the paper; this mode of storage is very secure because of the offline nature. The cryptocurrencies that offer this medium of storage are limited, and the user needs to be very cautious when using this form of storage.

As the user, it is up to you to understand and weigh the pros and cons of each of these forms of storage. After this, you can decide on the type of wallet to use based on what you intend to do with your funds. Read more on the best cryptocurrency hardware wallets you can use.