What is a Crypto Wallet?

If you are just taking your first steps in the world of cryptocurrencies, first of all, you need to decide where you will store your digital coins. Today, the safest and most reliable way to store cryptocurrency is a crypto wallet. There are many different crypto wallets out there, so which one should you choose? Cryptorobotics provides you with information about the cold and hot crypto wallets and will tell you how they differ as well as help you make the right choice.

What does a crypto wallet mean?

Unlike fiat money, which can be stored in a usual wallet, cryptocurrencies have no physical form. These are digital currencies, so they are stored in crypto wallets (digital wallets).

A crypto wallet is an application or program through which cryptocurrency owners can receive, store and send bitcoins or other digital currencies. This wallet can be compared to a bank account where you keep your money.

Crypto wallets can exist as mobile apps, websites, or physical devices that you can take with you or stash away securely.

Types of crypto wallets

Cryptocurrency wallets fall into two main groups: hot and cold wallets. Let’s see how they differ and what are their advantages and disadvantages.

What are hot wallets?

This is the most popular type of crypto wallet. Hot wallets are connected to the internet and can be accessed online or from a mobile device. Their popularity is due to the fact that they can be obtained for a relatively small fee or even free. Hot wallets include Web Wallets and Mobile Wallets.

Web wallets

Many cryptocurrency platforms provide their users with a free crypto wallet when registering an account. It is an application that can be used through a web browser. In addition, it also has a mobile version.

Mobile wallets

These wallets are quite convenient as they can be installed on a smartphone. They are ideal for those who use cryptos for peer-to-peer transactions, online shopping, bill payments, money transfers, and more.

On the other hand, since hot wallets are connected to the network, they can be hacked, so you need to be very careful when choosing a digital wallet. It is advisable to choose highly secure crypto wallets which use two-factor authentication (2FA) and multi-signature technology.

When choosing a digital wallet, always pay attention to the level of its protection, as well as the reputation of its provider.

Cold wallets

Unlike hot wallets, cold wallets do not have an internet connection. They are hardware devices for storing crypto assets.

Hardware wallets

This type of crypto wallet includes portable devices such as flash drives or other external devices. Since hardware wallets do not require an Internet connection, they are reliably protected from hacker attacks, but attackers can still get hold of the device if you don’t store it in a safe place. Even in this case, there is a chance that they will fail, since the wallet is protected by a password or pin code. But we still recommend that you keep your cold wallets in a safe place to avoid unpleasant situations.

Desktop wallets

Such cold crypto wallets are installed on a computer, which gives their owners full control over their funds and private keys. Desktop wallets act as an address through which users can send or receive cryptocurrency.

Paper wallets

It is a piece of paper with a private key and a public address printed on it. Seems not entirely safe, right? It is really true. Among all types of cold wallets, paper crypto wallets are considered the most insecure. You can get a piece of paper wet, accidentally throw it away or drop it on the street, and then you will lose access to your funds. However, we must admit that such a cold wallet is not threatened by malware.

Your private keys are printed on paper, so they are safe from viruses and hacker attacks, but you must take care of a safe place to store them. If you lose your paper wallet and someone finds it, then most likely you will lose your funds.

Besides hot and cold crypto wallets, there are also multi-signature wallets that allow multiple persons to sign documents and transactions using signature combinations.

Whichever wallet you use, a backup never hurts. If you lose your private keys and important wallet data, you will also lose your bitcoins. That is why it is very important to take care of backups.

Best crypto wallets

• Binance
• Coinbase
• Trust Wallet
• EXMO
• MetaMask
• MathWallet
• Exodus
• Trustee Wallet
• Electrum
• Binance Chain Wallet
• Bitcoin Wallet
• Samourai Wallet
• Mycelium
• BitPay
• Trezor

Which crypto wallet should you choose?

Both cold and hot crypto wallets have their pros and cons. They all serve to securely store your cryptocurrency, and the choice of a particular wallet depends on your needs.

Decide for yourself how much you are willing to pay for a crypto wallet and what level of protection and availability you need. If you are looking for an inexpensive or free wallet with instant access for money transfers, online shopping, paying bills, and other similar transactions, then hot wallets with an Internet connection are for you.

If you are going to store private keys and crypto assets in a secure place, you can use cold crypto wallets.

Choose the wallet that best suits your needs. Whichever wallet you choose, however, always be careful when giving information to wallet providers. Always protect your wallet with backups and strong passwords. Make sure that nobody else has access to your cryptocurrency wallet, and choose a provider with a good reputation to not worrying the safety of your funds.