Types of crypto Wallets 

What is a Crypto Wallet?

A crypto wallet is used to interact with a Blockchain network. The three major types of crypto wallets are hardware , software , and paper wallets. Based on their work, they can be furyher classified as cold or hot wallets. Software-based wallets are more accessible and more convenient, whereas are printed out on paper and are now ureliable and obsolete. in reality, crypto wallets don't store the currency but act as a tool of interaction with Blockchain, i.e., generating the necessary information to receive and send money via Blockchain transactions.

The information comprises pairs of private and public keys. Based on these keys, an alphanumeric identifier called address is generated. In essence, this address specifies the location to which coins can be sent to the Blockchain. The address can be shared to receive funds, but private keys are to be never disclosed. The private key can be used on any wallet for accessing the cryptocurrency. As long as the private key is known, funds are accessible on any device. Also, coins are just transferred from one address to another, never leaving the Blockchain..

Types of Wallets

A wallet is a combination of a public address and a private key. The wallets can be categorized based on the method and location of storage in the following segments. Crypto wallets can broadly be categorized into cold wallets and hot wallets:

Hot and Cold Wallets

Internet connectivity defines a wallet in terms of hot or cold.Hot wallets are connected to the internet and thus are less secure and pose more risks but are user-friendly.Cold wallets, on the other hand, are stored offline and don't require internet connectivity. Thus, improving security and less risk. When compared to a safe or a vault, more substantial sums of money can be stored than that in a carry-arround wallet. Hot wallets are more likely to be used for daily transactions, and cold wallets for more long-terms holdings. Hot wallets are easy to set up, and the funds are quickly accessible. Traders conveniently use them. Cold wallets are hack resistant, and thus cold storage is suitable for HODLers. As a protection method, only a small percent is stored in hot wallets while being able to trade directly from their cold storage devices..

Hardware wallets

Hardware wallets are hardware devices that individually handle public addresses and keys. It looks like a USB with an OLED screen and side buttons. it is a battery-less device and can be connected to a PC and accessed by native desktop apps. it costs up to 70-150 dollars, but it is worth it. They have received a mixed response. They are more secure than hot wallets and user-friendlier than paper wallets but less than web abd desktop wallets. They are available in different forms and offer reasonable amounts of control. They are difficult for beginners to use when the investment is significant. The Most popular hardware wallets are ledger Nano S and Trezor.

Paper Wallets

It is a physically printed QR coded form wallet. Some wallets allow downloading the code to generate new addresses offline. They are not prone to hacks, but the number of flaws has made them dangerous. A major flaw is not being able to send partial funds. Thus, it cant be reused. They used to be very popular for cold storage, but not after hardware wallets come onto the scene. All in all, if stringent security precautons are taken, then paper wallets can be set up.

Desktop Wallets

These are installable software packs available for operating systems and are becoming serious with time. Anti-virus is required because a system connected to the internet poses fundamental security issues. instead of keeping crypto on an exchange,desktop wallets for bitcoins should be used. They are third most secure way to store cryptocurrencies and the best method for cold storage in a completely clean system. They are easy to use, give privacy and anonymity,and involve no third party. Rwgular backing up of the computer is needed. Popular desktop wallets are Exodus, Bitcoin core, Electrum, etc.

Mobile Wallets

Mobile wallets are just like desktop wallets made for smartphones. They are quite convenient but are vulnerable to malware infection.Encryption of mobile wallets is necessary. They are practical and can be used on the go but open to viruses. Some mobile wallets are Coinomi and Mycellium.

Web Wallets

As the name suggests, these are accessed by internet browsers. The private keys are held in some web wallets and are prone to DDOS attacks. They can be hosted or non-hosted. Non-hosted is preferred as funds are always in control. They are the least secure wallets. They are not the same as hot wallets. They are ideal for small investments and allow quick transactions. Some of these are MetaMask and Coinbase.