BLOCKCHAIN HISTORY - Wallet Types and Terminology

Cryptocurrency Wallets over Time

People are asking me about wallet types. And I agree, it's technical. In fact, if you were to simply look up these terms with a goog search, you will probably be frustrated as well!

SO; without further ado, let us wade thru the "Kim Chee" and discuss the myriad of terms surrounding crypto currency wallets today!

A "dedicated wallet" is a typical wallet, like Vessel for STEEM, or most BTC wallets only handle BTC, right?
Most ETH wallets, are for ETH only.
That simple.

(Props to @jesta for Vessel for STEEM! Most do not realize while Steemit provides an excellent, world changing web wallet integrated with the FIRST social media to be built on a blockchain, Vessel is a great dedicated wallet app that also works for STEEM blockchain.)

So we talk in terms of a "dedicated wallet", or a multi-wallet like EDGE or Exodus. Multi-wallets are capable of storing many blockchains but are constantly being upgraded to support new currencies.

Wallet History:

Heavy wallet:
Wallets started out being "full nodes" running on the blockchain, and they would process every transaction and then tell you how much was in your wallet, and allow you access to transfer what was in the wallet.

Lite wallet:
A wallet that talks to a known good node on the network, holds your keys, and shows you how much you have in the wallet, and allows access to transfer funds in that wallet.

Occasionally a wallet can only handle 1 public key (or address on the blockchain) at a time. For people like me, that have at least 2 wallets for every blockchain i'm using (1 main, 1 for testing) then this can be a problem, but i simply keep more than 1 computer on hand 😉 One on the phone and one on the PC usually..

Heavy wallets can be a huge pain, and might need to run for a day to sync with the blockchain, BEFORE THEY EVEN ALLOW ACCESS to your funds on the blockchain. If the wallet is not sure by it's own accounting that your account holds funds (and it is not capable of doing so until it syncs with the network) it will not grant access to your funds, even though it will give you a current tally of what it currently believes your balance is.

Hot wallet:
On the network, it's actively communicating over the internet, it's open to being used (and hacked).

Cold wallet:
A paper wallet for example, that is not on the network ever, until it is restored to the wallet that generated it. Cold wallets can be handy, for storing crypto for years. But, they could be impossible for your survivors to understand, if they are left with a crypto key on paper, as their inheritance...

"Air-gapped" wallet, will mean that the wallet is capable on the client-side, of doing the cryptography necessary to use the private key, and will never broadcast the private key over the internet.

Hardware vs Software wallets:

Hardware wallets like the Trezor, simply keep your private keys on a small separate computing device that has no keyboard. It will connect with your PC< and ONLY allow access to your private key if you know the PIN number or IF you have access to the full backup password set to restore the wallet (in case it is lost, or PIN is forgotten).

The hardware wallet can be kept in a safe, and access will not be available to hackers to monitor your keyboard (with malware) and steal your password to your software hot wallet on your PC.