It is VERY important that you research the available options. Their are different types of crypto wallets each with pros and cons.
Decide which wallet best meets your needs. In some cases setting up 2 types of cryptocurrency wallets is a good idea.
Use the wallets to safe keep YOUR crypto. Use the wallet to pay or send crypto to an exchange to trade and store the rest.
Overview of Crypto Wallets
The desktop wallet is one of the oldest methods of storing cryptocurrency. It and the online wallet were the first type of wallets used. This wallet is actually software that you download for your desktop PC. The software is responsible for storing private keys that are used to transfer cryptocurrency. Many original miners of Bitcoin used desktop wallets to store the coins they were able to mine. You have complete control over your wallet at all times and are responsible for backing up your files. Some examples of desktop wallets include, exodus, jaxx,
Th primary advantage of a desktop wallet is that it eliminates third-part access to one’s Bitcoins. Only the person who has access to the desktop has access to the wallet.
- Better security than mobile or online wallets
- Free to downloaded
- No access to any third party
- Can require large downloads that consume a lot of computer resources
- Coin specific
- Requires ongoing maintenance
A mobile cryptocurrency wallet basically combines the features of a hardware wallet and an online wallet. Your mobile device becomes the hardware that keeps your wallet safe and allows you to manage your tokens.
These wallets are distributed in the form of apps that are downloaded from Google Play or the App Store. Most of them include QR technology which can simplify the task of sending or receiving a payment. Many cryptocurrency exchanges have mobile versions of their wallet. Some to consider are Airbitz or MyCelium
Mobile wallets are becoming more popular as offline retailers begin accepting Bitcoin. When you want to make a purchase with your mobile wallet, all you need to do is scan a QR code or use NFC “tap to pay.”
- Easy to use
- Works with most Android and iOS mobile devices
- QR codes for easy transactions
- Poor security compared to other wallets
- Losing your mobile device can mean losing your coins
An online cryptocurrency wallet may be defined as any wallet which is stored in the cloud by a wallet provider. An example of online wallets would be the wallets that are provided by cryptocurrency exchanges to their account holders.
An online wallet (web wallet) only requires you to keep track of your public and private keys. Unfortunately, online wallets are perhaps the most vulnerable to security breaches because they are always exposed to the Internet. You can use a Coinbase wallet but they do not support many cryptos, another would be Kraken
- Easy to set up and use
- Very convenient – access with any device that connects to the Internet
- Some wallets like those provided by cryptocurrency exchanges are fairly safe
- Overall security is low compared to other wallets
- No Internet access means you cannot access the wallet to check balances, etc.
- A separate wallet can be required for different cryptocurrencies depending on the wallet you choose
A hardware wallet allows an individual to keep their public and private keys stored in a hardware device and it is what we recommend users to get. Many of these devices resemble a USB flash drive. They are compact and can be carried on one’s person at all times. Even if you are just starting out, it does not take much to get a hang of it.
Many hardware wallets are available from commercial suppliers like Ledger and Trezor. They can be somewhat on the expensive side, but many consider the added security to be worth the additional cost.
To send a payment it is fairly easy task. Simply plug the device to a computer that is connected to the internet and send all this is done while keeping your funds offline. If you decide to use a hardware wallet, the Ledger Nano S is an excellent choice. Trezor and KeepKey are 2 more. Make sure to buy directly from the official site and avoid Ebay and Amazon.
- A micro controller to store keys
- Protection against computer viruses designed to steal tokens
- Interactive, secure use
- Keys are never exposed
- Ran by open-source software in many cases
- Can be expensive for some
- Losing the hardware device can present problems
A paper wallet is what would be referred to as cold storage wallet in that it is not connected to the internet while a mobile or online wallet would be a hot storage wallet. You can think of a paper wallet as the analog version of a hardware wallet. Paper wallets actually contain QR codes which represent the private and public keys of the owner. These are printed on an actual piece of paper which the owner keeps with them at all times.
Paper wallets may be only truly hack-free method of storing cryptocurrency. However, their weakness should be apparent. Losing the paper wallet means losing the keys and access to one’s coins. (More on bitcoin paper wallet here)
After setting up the paper wallet you can simply make a transfer to the public address of your paper wallet and when you wish to spend or withdraw currency, you can send it either manually by typing the private key or simply scan the QR code. This is known as “sweeping”
- Virtually impossible to have your Bitcoins or other tokens taken
- Very simple to use
- Easily stolen
- Can get damaged
- Easily lost
There is another type of wallet, however, that isn’t as well known. The Bitcoin brainwallet is one that resides only in your memory. It basically allows you to store your Bitcoins in your mind. Sound bizarre? Read on to find out more about the ultimate form of secure Bitcoin storage. Read more about it brainwallet here