Exploring the Various Types of Crypto Wallets

With the rapid increase in the popularity of cryptocurrency, the concern for secure storage for cryptocurrency is also increasing. Consequently, we are seeing a growth in the number of crypto wallet developments.

But what is a crypto wallet and which type of crypto wallet is the most secure of them all? This blog will give answers to all these questions. In this blog, we’ll explore the various types of crypto wallets and understand their key features.

So, without further ado, let’s get started!

What is a Crypto Wallet

Simply stated, a cryptocurrency wallet works as a facilitating unit for trading as well as storing cryptocurrencies. While it may seem similar to the concept of a physical wallet, it is actually quite different from physical wallets storing tangible currency.

Crypto wallets do not store the cryptocurrencies in them, however, they are responsible for the management of cryptographic keys. These cryptographic keys are the proofs/traces of any transaction in the blockchain ecosystem. All in all, a cryptocurrency wallet is the foundation of interaction in the blockchain network.

Crypto wallets can be of different formats –

• Software Applications: This type of crypto wallet can be installed on a computer or even a mobile device.
• Hardware Variants: The hardware variant offers more security as compared to the software one.

Let’s dive deep into the different types of crypto wallets and understand how each one differs from the other —

Types of Crypto Wallet

Based on different factors such as internet connectivity, storage location, etc, there are a few types of crypto wallets —

1. Hot and Cold Wallets

Based on the requirement of interment connection to run the wallet, crypto wallets can be categorized into two types — Hot and Cold wallets.

Hot wallets are ones that require an internet connection in order to manage cryptographic keys. As hot wallets are open to internet connection, they also become vulnerable to online threats.

However, hot wallets are more user-friendly in terms of usage. Moreover, hot wallets offer easy access to funds, consequently, they are used for regular daily transactions.

On the other hand, cold wallets are the ones that can be stored offline without any internet connectivity. Due to their offline nature of storing cryptographic keys, cold wallets are more secure and reliable in terms of security.

While hot wallets are more preferred for frequent cryptocurrency transactions, cold wallets are used for holding cryptocurrency.

2. Hardware Wallets

Hardware wallets, as the name suggests, are physical wallets that look kind of similar to a USB. A hardware wallet, disconnected from any outer connection, individually handles public addresses and keys.

Connect the hardware wallet to a PC and the crypto wallet will be accessed without any internet connection. Moreover, a hardware wallet is a battery-less device and usually costs around 100–150 dollars. Being under the cold wallet category, hardware wallets are more secure than hot wallets. Some of the most popular hardware wallets are Trezor and Ledger Nano S.

3. Paper Wallets

Paper wallets are basically physical wallets printed in the form of a QR code. Once someone downloads the code, a new address is generated offline. Even though paper wallets are secured from any type of hack, they still raise a number of issues. One such issue is the paper wallet’s incapability to send funds multiple times as a paper wallet can not be reused.

This cold wallet storage was quite popular at one time, however, since the arrival of hardware wallets, they are not being preferred much.

4. Desktop Wallets

Desktop wallets are basically crypto wallets in the form of installable software. This software can be installed on your computer device to access your crypto wallet in the computer device itself.

Comparing the security factor, desktop wallets are the third most secure type of crypto wallet.

Moreover, desktop wallets are more easy to use as compared to many other crypto wallets. Also, the involvement of no-third-party apps makes desktop wallets a good option for maintaining privacy and anonymity.

Some popular desktop wallets include Bitcoin Core, Electrum, and Exodus.

5. Mobile Wallets

Mobile wallets are quite similar to the UPI wallets that we use for money transactions. We can also define mobile wallets as desktop wallets for smartphones. Similar to UPI wallets, mobile wallets use QR codes to make transactions. For day-to-day transactions of crypto, mobile wallets are a good option. However, proper encryption of a mobile wallet account is crucial in order to make it safe from malware infection. Popular mobile wallets include Mycelium and Coinomi.

6. Web Wallets

Considered as the least secured wallets, web wallets are accessed through the internet browser. Simply stated, the privacy keys in these wallets are stored over the web, making them vulnerable to DDOS attacks. Web wallets are of two types, hosted and non-hosted. Generally, non-hosted wallets are more secure and convenient as they offer complete control over your web wallet. Some examples of web wallets include Coinbase and MetaMask.

Parting Words

Coming to the end, one thing is clear — cold wallets are the ones offering utmost security, however, when it comes to regular transactions, choosing a hot wallet is much more convenient.

Are you also thinking about developing a crypto wallet? If so, incorporating all the essential features and security aids will require professional help from an expert cryptocurrency wallet development company.

Technoloader stands on the front as one of India’s leading crypto wallet development companies. Connect with Technoloader today and let’s understand your vision, execute the perfect procedure, and bring out an ideal crypto wallet that everybody will love!

Call/Whatsapp: +91 7014607737 | Telegram: vipinshar | Email: info@technoloader.com