Understand What Crypto Wallets are and how to Choose the best.
Crypto Wallets are very important to everyone in the crypto industry, as they're how you can perform crypto transactions such as buying, holding, selling, sending, receiving, and a lot more.
Anybody who wants to join the crypto race must have a functional crypto wallet to be able to buy, sell, receive, send, and store his/her cryptocurrencies. Having said so, crypto wallets are known as a device, service, or program that is created to help us store our Private or public keys for performing crypto transactions.
Crypto wallets provide us with an easy means of signing in, which can be done through encrypting or signing using your registered username and password, which we are going to learn more about in this post.
| Types of Cryptocurrency Wallets |
|---|
There are many types of crypto wallets with different functionalities, which one needs to know before choosing the best according to the features you are looking for.
- HOT WALLETS
This is a type of crypto wallet that relies on an internet connection to work. Hit wallets are more user-friendly since they have many more features that allow users to receive and send cryptocurrencies in and out of their wallets with few limitations.
In simple words, a hot wallet is a type of wallet that is accessible online and has three different categories, such as mobile wallets, desktop wallets, and browser wallets.
Mobile wallets: This is a category of hot wallets that are available as a mobile version, which you can either download as an application on your phone or access from your browser. In this type of wallet, users can access third-party cryptocurrencies across different devices. Metamask is an example that offers both mobile and browser versions to users.
Desktop wallets: This is the type of crypto wallet that is accessible via a computer. Desktop wallets offer users both online and offline cold storage, and the wallet application is accessible via the Internet. Exodus wallet is example.
Browser wallets: This is the type of crypto wallet that allows users to install it as an extension into their browser. Phantom and Metamask are good examples of browser wallets. Browser wallets have the integration of Web3 and DeFi (Decentralized Finance). Today, the crypto industry has grown so large that we now have browsers like Firefox and Opera that give users access to Web3 and crypto wallets.
- COLD WALLETS
These are the types of crypto wallets that store users' funds in an offline mode, where users only need an internet connection to perform some specific transactions. Cold wallets are classified into two different types, which are paper wallets and hardware wallets.
Paper Wallets: This is the type of wallet where a user has to have a printout of his or her public and private keys that are linked to the wallet. In this type of wallet, you can import your key pair into a crypto wallet that is online and carry out your transaction.
However, this is the type of crypto wallet that requires the operation of someone who is an expert since it's not as common as other types of wallets. A good example of a crypto paper wallet is Bitaddress.
Hardware Wallets: Friend Hardware Wallets are wallets you can access by using them physically through a USB connection. In this type of wallet, users use physical devices like USB flash to store their cryptocurrencies, and as a holder of a hardware wallet, you can access your cryptocurrencies via private keys. A good example of hardware wallets is Trezor and Ledger wallets.
| What to Consider in Both Hot and Cold Wallets |
|---|
One doesn't just choose a crypto wallet without putting some things into consideration first, because not all wallets allow you to trade your crypto. Though, when choosing a crypto wallet, it is advisable to look out for the information given below.
- The convenience and Security
The development and support team - If the wallet supports tokens, apps, and blockchains
- The features of the wallet if it supports NFTs and other projects
| Advantages and disadvantages of hot wallets over cold wallets |
|---|
Based on how far I have been using both types of wallets, I can say that cold wallets provide users with better storage for long-term storage of cryptocurrency, while hot wallets are best used for carrying out daily crypto transactions.
| Advantages of a hot wallet over a cold wallet | disadvantages of hot wallets over cold wallets |
|---|---|
| It provides users with easy accessibility to cryptos. | It is slower to access cryptocurrency. |
| It is free of charge. | It is expensive to buy hardware. |
| There is no risk for a user to lose any physical items. | A user could lose a physical device or piece of paper. |
Conclusion:
The purpose of this post is to introduce you to the two types of crypto wallets and their categories so you can decide which is better for you. This post is written based on my understanding and the research that I carried out on other sites, which you can read further from the reference links shared below.
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Dear @josepha ,
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You have given a detailed post on how to choose cryptocurrency wallet and what they are but please remove the second image of yours that is taken from bitstamp, it is copyrighted
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the most crucial thing about crypto assets is where you can store them safely.
of course this is crucial, if we choose the wrong digital wallet. There are many cases of digital wallets stealing their users' crypto.
However, hardwallets also have limitations, but they are the safest to use.
maybe assets that are often used in the short term can be stored in a digital wallet, but assets that you invest well are stored in a hardwallet.
nice review bro.
The convenience and Security is the first thing a user need to look out for when choosing a crypto wallet. Thanks for your time here.
of course, i agree
if the assets we keep are not safe, what are they for 😅
Thank you, friend!
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