If you’ve read any online news in the past few months, you’ve likely heard about cryptocurrencies. And if you’ve opted to purchase this 21st-century kind of digital currency, you’ll need a cryptocurrency wallet to store it. But what is a cryptocurrency wallet exactly? And are you truly in need of one when you enter the world of cryptocurrencies? Not to worry, we have you covered.
What is a Cryptocurrency Wallet?
A cryptocurrency wallet is a website that holds your public and private keys. To access your cryptocurrency, you must have these two keys. This digital wallet enables the sending and receiving of cryptocurrencies like Bitcoin and Ethereum. The sending and receiving of crypto wallets retain your passwords, also known as keys so that you can access your digital currency. To determine the greatest cryptocurrency wallet, you must first comprehend the various wallet configurations. Finding a reputable crypto wallet development company who have already worked on many cryptocurrency wallet projects for their clients and delivered on time is one of the best options.
Types Of Cryptocurrency Wallets
It is crucial to understand that there are multiple types of cryptocurrency wallets. Depending on how you choose to access your cryptocurrency and what is most convenient, this information will help you determine which type of cryptocurrency wallet to use.
1. Paper Wallets
You can choose a paper wallet in which your passwords are kept on paper or another physical medium, as the name suggests. You would then deposit this in a secure location. While this would make it much more difficult for someone to acquire your password and gain access to your crypto, it may also make it much more difficult for you to access it regularly.
2. Hard Wallets
This wallet stores your password keys on a physical device, typically a thumb drive. It is designed to be easier to maintain than a paper wallet, yet portable enough to travel with and use as needed. Hard wallets, like Trezor and Ledger, can cost less than $50 or more than $150 and come in various prices.
3. Soft Wallets
These wallets are stored on the cloud or comparable servers to protect your private keys, so long as you have a password and two-factor authentication enabled. Soft wallets, also known as hosted wallets, can be hosted by free crypto wallet providers such as Coinbase and Gemini.
4. Cold Wallets
Here is where things might become confusing: Cold wallets, also known as cold storage, do not rely on the internet to store passwords. Instead, all storage occurs offline, using a paper or hard wallet. Hence these wallets are known as cold wallets.
Also read: cryptocurrency-wallets-need-of-the-hour
5. Hot Wallets
These wallets, also known as online wallets, are online or app-based and save your password information so that you can send, receive, and spend cryptocurrency. These wallets require internet connectivity to function. As a result, soft wallets fall under the category of hot wallets, as you can access them no matter where you are as long as you use your mobile device or computer.
Hot wallets maintain the ledger of transactions on the decentralized blockchain. When a hot wallet relies on software downloaded to your mobile device or desktop, it is also known as a software wallet. Software wallets secure your crypto valuables using encryption.
6. Bitcoin Wallet
Since Bitcoin is the most popular cryptocurrency and has existed since 2008, you may encounter Bitcoin in a broad sense. Bitcoin is merely a sort of cryptocurrency. A Bitcoin wallet is used to store, send, and receive Bitcoins.
Pros And Cons Of The Multiple Wallet Types
Soft Wallet Pros And Cons
Pros
- Convenient, you don’t risk losing your cryptographic keys as frequently as you would otherwise.
- Facilitates online crypto trade.
- Often free.
Cons
- As convenient as online wallets may be, the wallet is only as safe as the supplier makes it, leaving you vulnerable to hackers.
- Your cryptocurrency is less anonymous and can be traced.
Hard Wallets Pros And Cons
Pros
- Some favour this strategy to preserve complete control over passwords and reduce the likelihood of a security compromise.
- You possess and manage your crypto.
- It can be a more anonymous way to hold cryptocurrency.
Cons
- Paper and hardware wallets are easily misplaced and susceptible to security threats or theft.
- It can be expensive
Remember that your cryptocurrency wallet, regardless of the wallet type in which you store your private keys, is not FDIC-insured like a regular bank account. This means that the security features of your chosen wallet should take precedence.
The Best Cryptocurrency Wallets
1. Coinbase
Coinbase (not to be confused with the Coinbase cryptocurrency exchange) markets itself as a one-stop-solution for all cryptocurrency-related activities, including providing a cryptocurrency wallet. The Coinbase mobile app, which is available for both IOS and Android, enables you to manage all of your tokens, including Bitcoin, Bitcoin Cash, Ethereum, and Litecoin, among others.
Coinbase is one of the largest players in the cryptocurrency market, with more than 56 million confirmed users, and its wallets and other products rely on open-source software.
The Coinbase wallet provides access to the following features:
- Buy and store tokens.
- Participate in ICOs (Initial Coin Offerings).
- Acquire unique works of digital art and other valuables.
- Explore decentralized software (DApps).
- Shop at merchants that take cryptocurrencies.
- Send cryptographic assets to anyone on the planet if you know their login.
Additionally, you do not need a Coinbase account to access all of the Coinbase wallet’s capabilities. Transferring assets from your wallet to your trading account is not quick if you have a Coinbase account.
2. Electrum
Founded in 2011, Electrum is one of the “oldest” Bitcoin wallets. It also utilizes open-source software regarded as a hot wallet. Fans of Electrum appreciate that it is also compatible with cold storage wallets, like KeepKey, Trezor, and Ledger Nano X, and allows you to use it as either.
Electrum instantly verifies that your transactions are in the blockchain because it employs Simple Payment Verification (SPV). This means it merely asks the Bitcoin network servers instead of downloading the entire blockchain.
Electrum utilizes malware-resistant two-factor authentication. It also functions on desktop and mobile devices. However, the option to set up multi-signature transactions is a fan favorite. Another popular feature is the ability to simultaneously transmit numerous transactions to multiple addresses. This reduces the transaction fees you incur.
3. Exodus
Exodus is a software wallet regarded as a decent alternative for new people in the crypto sphere due to its simpler features that are less appealing to sophisticated users. Exodus focuses on providing a very intuitive and user-friendly interface to facilitate wallet navigation.
It supports more than 130 cryptocurrencies, such as Bitcoin, Ethereum, Dash, Dogecoin, and many others. Exodus has both a desktop wallet and mobile app that enable you to manage your digital assets on the go. The application is accessible via iOS and Android. However, one of the best advantages of Exodus is the availability of customer support around-the-clock. This is another example of how this wallet could benefit newcomers.
Initially, the world of cryptocurrencies can be a little intimidating, especially when learning a completely new language about digital currency. Crypto wallets are another language component that allows you to purchase, sell, and store your cryptocurrency. Choosing one depends on your familiarity with cryptography and the level of security and accessibility you require. This language should not intimidate you. Researching the numerous possibilities enables you to determine which wallet best suits your needs and preferences. You can also reap more benefits by creating an Exodus wallet clone for business purposes and starting your new revenue-generating stream.
Conclusion
Cryptocurrency wallets are integral to crypto transactions as they allow the safe storage of your digital cash and valuables. Since these wallets are constructed with solid security features that include strong encryption, you may simply buy, sell, stake, or exchange your currency and earn interest. Moreover, these wallets let users become holders of several crypto coins, making them a one-stop platform for storing and utilizing limitless cryptocurrencies. Therefore, ensure a crypto wallet if you wish to trade in bitcoin. You must make sure which coins are supported by those wallets and choose the proper one for asset holding.