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What types of Wallet to use to store bitcoin or other cryptocurrencies?
It is a question that we must ask ourselves when entering the world of cryptocurrencies, if we want to start doing crypto exchanges, we must think very well about what type of cryptocurrency wallet we will use.
We can also find that some are more user friendly than others and give users some advantages that other wallets do not have, such as converting small amounts of other cryptocurrencies
But like all things there are advantages and disadvantages between them, the wallet (or digital wallets) that can store cryptocurrency can be classified into:
Hot wallet: This type of wallet is preferred for users who constantly make cryptocurrency transactions, since this type of wallet is permanently connected to the internet, an example of which can be the mobile digital wallet.
Great for regular and micropayments.
Convenient and easy to use.
Do not require physical media.
Can be hacked.
Always connected to the Internet.
If you uninstall the program, you may lose access to your wallet forever.
Cold wallet: these types of wallets are the way to store cryptocurrencies without the need to be connected to the internet. These are usually the types of tools that are not linked to the network such as paper wallets. Cold storage eliminates the interaction of the wallet and the online network, which significantly reduces the likelihood of theft.
The possibility of offline storage.
Poorly adapted for regular payments.
May be lost with the carrier.
Currently there are 5 types of digital wallets where we can store our cryptocurrencies these are in the previous classification that are hot or cold wallets which is practically if it is an online wallet or an offline wallet, all these wallets can contain a large amount of cryptocurrencies, not only amount but also some can contain different types of currencies in the same wallet, some can only save bitcoins in them but others can save from bitcoins to dogecoins:
- Desktop Wallet
- Mobile Wallet
- Web Wallet
- Paper Wallet
- Hardware Wallet
Next we will see the characteristics of each one.
The Desktop Wallet is a program that is downloaded and installed on a PC or laptop. It can only be accessed from the same computer on which it was installed.
A Desktop wallet allows you to create and store your private key and public address to send and receive your cryptocurrencies and, therefore, offers one of the highest levels of security, this type of wallet is user friendly since it allows the user to adjust its interface and thus generate a better understanding for users new to cryptocurrencies.
The Mobile Wallet is, as its name suggests, a wallet based on an app for iOS, Android, Window devices.
A mobile wallet is very useful because it can be used anywhere and can function as a payment service to receive and send money (even in stores that accept payments in cryptocurrencies) through mobile devices.
The Web Wallet is stored in the cloud, based on web applications within a domain and, therefore, is accessible from any device and any location. Since data (public and private keys) are stored on a server in the cloud controlled by third parties, this type of portfolio is more vulnerable to attacks and theft.
The Paper Wallet is the classic example of Cold Wallet since it does not work online and therefore it turns out to be very safe.
Creating a paper wallet is very simple and can be done in two ways: through software or through an online platform. In both cases, a private key and a public key of the wallet will be generated, which you will have to write down on your paper wallet and which you will carefully keep in a safe place.
A paper wallet comes with two qr codes. The top qr code is the public key and the bottom qr code is the private key. The public key is used to fund the wallet and the private key is used to retrieve funds from the wallet.
An example of the safest and best-known sites where to generate a paper Wallet are: Wallet Generator and Bit address.
The Hardware Wallet is a device, usually in the form of a usb, that stores your keys to access your crypto in a very safe way, since it is not managed online. One of the examples of Hardware Wallet is the Trezor.
As you have seen, there are several solutions to access and manage your cryptocurrencies more or less securely. But there is also another option (we are not talking about a wallet), usually adopted by novice users or those who aren’t fully aware of the risks…
We refer to the management of crypto funds by an exchange.
If you do not know, a cryptocurrency exchange is an online platform that acts as a true financial market, where all types of cryptocurrencies can be bought and sold at the free market price.
While with a wallet we can take the control of our crypto funds, with an exchange this is not possible. What an exchange does is create automatic addresses for each supported cryptocurrency, belonging to the wallet of the same exchange.
This means that, when storing your funds in the direction/wallet of an exchange, you will not be the custodian of your crypto since, if the exchange closes, you will lose all the funds placed in it. In other words, the exchange acts like a bank and, as such, is the custodian/owner of the funds of its users.
Remember that to start trading cryptocurrencies and obtain profits in addition to a good virtual wallet you need cryptocurrencies, that you can find out on Bitnovo, after a few simple steps you will have your cryptocurrencies in the wallet you chose and you can start trading and making money with them
So, be careful when choosing the method to store and safeguard your cryptocurrencies, as they all have different features that accommodate different types of users.