All you Need to Know about Cryptocurrency Wallets

All you Need to Know about Cryptocurrency Wallets

As there’s a wide range of cryptocurrency wallets, it’s always hard to make a choice and start using the right one. The storage for cryptocurrency should be well-secured and protect everything you store in it as a usual wallet for real dollars and pennies. But the main difference is that it doesn’t contain actual coins. A crypto wallet keeps the following data:

– Private key;

– Public key;

– Digital coins.

Cryptocurrency Wallet

 

Except for the storage, these crypto keepers allow users to receive and send coins, moreover, give an opportunity to follow transactions and keep an eye on balance. So, cryptocurrency owners may control finance using them.

As it’s clear what digital coins are, let’s find out what are the special details of private and public keys, why they are different and what to do with them.  The first key is a code which only its owner knows. It’s used as a PIN on usual cards given by banks and people type it to authorize all transactions. So it should be hidden from anyone not to lose money. The public key is like a credit card number, it means that it should be kept in a secret too. By using it one may fix the address of the storage.

Which cryptocurrency wallet type is the best?

There are three categories of wallets: hot, cold and online exchange. They are similar and different in some ways. Let’s take a look at them.

Hot Type

These storages are represented by two types: online and software. They are available for downloading through apps and proximately connected to the Internet.

Online or e-wallets storage the personal information including PINs and other passwords on servers of the company or third-parties. They have an online connection from any device you work on. E-wallets are more open for cyber-criminals than the others no matter that the developers say about the importance of safety.

Pros:

– Suitable for any device

– There are many free options

Cons:

– A low level of security

– Challenging for newcomers

The example is The Blockchain Wallet. It’s very popular option as it doesn’t store your passwords in its servers.

crypto Wallet

 

Software wallets are based on their downloading as apps on tablets, laptops, and also smartphones. The developers don’t keep your personal information and transacting details on the servers, everything is protected by you. Only you are responsible for thefts, phishing, and getting dangerous codes. All crypto owners who use such wallets are recommended to backup the devices as often as you can.

Pros:

– Flexible and simple for usage

– Accepted with many retailers, allows paying for goods and services

Cons:

– Nobody is responsible for users’ protection

– A great variant for experts who can provide the security by themselves

Electrum is one of the most widely-used examples of such wallets.

Cold Type

Cold type is represented in hardware and paper variants. In some ways they are similar, but they have some differences too.

Hardware wallets are very similar to a USB from the first sight. They physically store all the data and don’t have a direct connection to the Internet. They should be stored in a protected place by users as they can be stolen from your office or house.

Pros:

– High level of security

– Some manufacturers offer recovery features

– You can control the protection of your personal data and coins

Cons:

– Wear and tear which happens physically

– Nobody is responsible for users’ security

– There are no free options on the market

Trezor is one of the examples of such wallets. One more popular option is Ledger Nano S.

crypto Wallet explanation

 

Paper wallets are offline as other hardware options, that’s why we put them in this category. They are represented with pieces of paper on which all data, private, and public keys are written. It means that nobody can hack your wallet and stole the information. The main recommendation is to use only laser printers for printing, as ink ones can fade or make a low-quality print.

Pros:

– High level of protection provided with QR codes

– Easy to use and available no matter which device you have

Cons:

– It’s very easy to lose such wallets

– It’s hard to protect them from physical damage

The commonly used variants are Bitcoinpaperwallet.org, Bitaddress.org, and Walletgenerator.net.

 

Cryptocurrency Wallet explanation

 

Online Exchange Type

This type stores all users’ data on exchange servers which are the same as to store keys in clouds. It’s easy to start using them, but hacking them is even simpler. There are many cases which can be given as an example. Beginning in 2014 online exchange wallets started to lose money because of the hackers. Mt Gox and Bitfinex are the examples. The second one had problems with withdraws and delayed them. As it became clear in the end, there were some DDoS attacks which led to money losses among users.

Pros:

– Easy to use

Cons:

– Extremely low level of security

To sum up

Which wallet is the best is up to you and it fully depends on your goals. If you have great sums of cryptocurrency, store it on hardware options even if their price looks high. If you’ve made money online, decide what you’ll do with it. If your goal is to keep it as long as you can – paper and other hardware options are the only which you can use without losing money. But if you make transactions every day and your goals are short-term, don’t be afraid of keeping coins in e- or software wallets. So we hope that you’ll find this very storage and be protected from hackers and robbers.

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