Cryptocurrency is the digital money that is required to be stored safely but requires complete knowledge and skills. Cryptocurrencies are stored in a wallet, and a wallet is a software program designed to store public and private keys that help in the transfer of digital currencies. Using a cryptocurrency wallet, users can check their balance, interact with blockchains, send and receive digital payments, and more. In order to manage digital assets like bitcoin and to keep them secure, a cryptocurrency wallet is required. You can learn from icoholder.com wallets in this article.
There are many different types of cryptocurrency wallets available online, but the main difference is recognized by knowing whether the wallet is hot or cold. Let us explore a guide that helps us understand choosing the right wallet and protecting funds by using proper security measures.
Hot Wallets
A hot wallet is a wallet that is to be connected to the internet and is accessible all the time. The hot wallet mainly includes mobile wallets, software wallets, exchanges, and online cloud wallets.
Cold Wallets
Cold wallets aren’t connected to the internet and store the private keys and funds in offline mode. In cold wallets, users can also receive funds all the time but cannot transfer because there is no connectivity to the internet. The cold wallets mainly include paper wallets, hardware wallets, and more.
Many cryptocurrency users use both hot and cold wallets. The main thing that users must know is that hot wallets are handy and are therefore best for frequent trading, whereas cold wallets are better for users that want to hold cryptocurrencies for the long-term.
Various types of cryptocurrency wallets
Cloud wallets
Cloud wallets are online wallets, and these wallets allow users to access their funds from any location, computer, and device. The best thing about these wallets is that they provide high convenience and store the private keys online. The private keys in cloud wallets are controlled and stored by third parties, which makes them more vulnerable to theft and cyber attacks. Some popular types of cloud wallets include Metamask, Guarda, Blockchain.info, and Coinbase.
There is also a safe version of these online wallets that are non-custodial online wallets. These wallets are accessible through apps or the web but don’t provide control to third-parties for accessing your private keys. These wallets allow its users to trade coins securely.
Software wallets
Software wallets are the wallets required to be downloaded and installed on either a smartphone or a personal computer. Software wallets are the type of hot wallets, and these require a high level of security. Because these are downloaded and installed, there is a high risk of viruses, and they cannot protect your wallet against viruses and hacks, so it is suggested to use anti-virus for your smartphones and computers. Also, instead of desktop wallets, mobile wallets are way better because they allow users to easily manage the funds.
These wallets allow users to access funds through multiple devices that include laptops, hardware wallets, smartphones, and more. Some best and most popular software wallets include info wallet, Jaxx, Exodus, Electrum wallet, Freewallet, and more.
Paper wallets
Paper wallets are categorized as cold wallets, and paper wallet generally means a paper print of digital keys that are public key and private key. As compared to other wallets, paper wallets are the most secure wallets. Users can easily import their paper wallet in software clients or scan the QR code to transfer them. The best types of paper wallets include MyEtherWallet and more.
Even these wallets are cold, but there are still many risks of using these wallets. For instance, it might be possible that paper wallets get burnt, copied, or damaged due to natural calamities. It is always suggested to make several copies of your paper wallet, and the private key must be kept offline.
Some best practices to secure your private keys
- Avoid storing cryptocurrencies in exchange for a longer period.
- Always enable the feature of two-factor authentication or multi-factor authentication as it adds to a layer of security to the bitcoin wallet.
- Never use your cryptocurrencies under your identifiable address or real name.