Cryptocurrency Wallet Types
As witnessed in the above diagram, digital wallets come in five major categories ranging from computer software programs to regular sheets of paper. To start off, a Desktop wallet is a digital wallet that is downloaded and installed on a PC or laptop. The user can access the wallet only on the desktop/laptop on which the digital wallet software is downloaded and installed. This type of digital wallet ranks high in terms of security because your digital currency is stored offline on your computer’s hard drive. It is very important to keep your desktop/laptop up to date in terms of malware and virus software. Take the necessary precautions to keep your computer security high so your digital assets stored on your desktop wallet are not susceptible to hacking and viruses.
Online wallets represent a class of digital wallets that are stored on the cloud. These types of wallets are provided and controlled by third parties. These third party services store your wallet’s private keys on their data servers making them much more vulnerable to theft and hacking attempts due to their centralization of digital storage. The great advantage of online wallets is having accessibility to your digital wallet from any computer with internet access.
Mobile wallets are like desktop wallets in the sense that you must download and install the application on your mobile device. The accessibility of mobile wallets is slightly better than desktop wallets because transporting a mobile device is much easier than carrying around a laptop computer. Another advantage of a mobile wallet is the ability to use the wallet at many retail locations. These mobile wallets are built to be much smaller and simpler due to the reduced storage space on mobile phones in comparison to desktop and laptop computers. This type of digital wallet is considered more secure than online wallets. Furthermore, malware and viruses are not as advanced on mobile applications as they are on desktop and laptop computers making this category of digital wallets slightly more secure than a desktop wallet.
Hardware wallets differ the most from the first three types of digital wallets mentioned above. A hardware wallet is a special type of digital wallet that stores the private keys of the user in a secure hardware device such as a USB. Hardware wallets are immune to computer viruses that can create havoc for desktop and mobile digital wallets. Furthermore, hardware wallets usually have the capability to store a wider range of cryptocurrencies rather than desktop and mobile applications. The major advantage of the hardware wallet is keeping your digital assets offline otherwise known as cold storage. This method is highly secure and very risk averse. However, this is the most expensive type of digital wallet.
A paper wallet offers the highest level of digital security. This type of wallet is simply a physical printout of your public and private keys. A paper wallet isn’t any different from a digital wallet except for the fact that your information is kept offline on a physical sheet of paper. While a paper wallet offers the highest form of digital security and the cheapest cost, it is susceptible to physical loss and corruption. You may lose your paper wallet by simply misplacing it or spilling coffee on it resulting in a loss of your public and private keys. It is a wise approach to make several backups of your paper wallet to reduce this risk of physical loss. Paper wallets usually work in tandem with a software application that will generate your keys prior to print out. It is also possible to transfer funds from a paper wallet to a software wallet prior to making a purchase or receiving funds before transferring the funds back to the paper wallet once again.
Author: blckchainexplain
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