Knowing what crypto wallets are, what they are for, and which ones are available is more important than you think. This is the safest way to manage your cryptocurrencies. But of course, there are so many options that it can be confusing to choose the right one. Some wallets can be hacked, so they fail to secure assets. We want to help you choose the best crypto wallet for you, so stick with us to learn all about them.
What are crypto wallets?
Crypto wallets are software that manages your cryptocurrencies, both for sending and receiving them. From this wallet, you'll be able to store the ones you want and keep track of your balance through blockchain technology. This system will store your public and private keys since the cryptocurrencies themselves aren't stored in the wallet but in the keys to access them.
This means that when you create your crypto wallet, the first thing you'll need to ingress is a private key. This key is the one you'll use to log in to your account, and you shouldn't share it with anyone. Whoever has access to this key will be able to control all the income from your wallet.
Then, the public key is created after the private one. Both will be mathematically linked to each other. The public key is the one you'll use to create your address to receive transactions. It's almost like a bank account number so you can share it publicly without any problem. Keep in mind that you can't forget the keys to ingress to your wallet. If it ever happens, you'll lose all the cryptocurrencies you have. It's almost like losing your physical wallet.
Crypto wallets categories
Before exploring the types of wallets that exist, we must first categorize them. These are split into two categories, depending on whether the private key comes in contact with the Internet or not:
Hot wallets are those where the master private key is generated on a device connected to the internet. These are slightly less secure because anyone can obtain a copy of that key and send the stored cryptocurrencies to themselves. However, they offer the advantage of easier and faster access.
Cold wallets are wallets whose master private key never comes into contact with the internet. They're more secure because transactions are signed with the private key offline. Details of the transaction are then broadcast to the blockchain network via the internet. Free cold wallets are more complicated to use, while the simpler ones are paid (hardware ones). These are used to store money for the long term, as a kind of private safe where the owner has full control.
Type of crypto wallets
Now let's move on to identify the types of crypto wallets. The decision of which one is the best will depend on the need and use of each person since each one is best suited to a specific purpose according to the user's profile.
- They're small devices that connect through USB ports.
- Their use is quite safe, even in infected devices. That's because transfers are validated externally by the hardware wallet itself.
- To fulfill their function properly, the private keys of the address (which function as a "password" for the account) must be stored offline.
- They're quite simple. They only consist of a piece of paper with the private key and public address printed or written on it.
- They don't require leaving data online, so they help prevent theft or hacking of the fund's access.
- It's considered the least secure by many, as others mustn't have access to the paper. But if you keep it in a safe place, this won't be a problem.
- Some of these desktop wallets have an off-site copy of the blockchain, so the computer has access to the network.
- Some, like Bitcoin Core, consume a lot of space, processing, and internet bandwidth while downloading the blockchain network to the computer.
- Many crypto networks have software created to operate as these wallets.
- These wallets allow trading from any place or time through the smartphone.
- It has attractive options such as linking your computer wallets to your cellphone wallet.
- When you have this wallet, you must make sure that the private key remains in your possession. This way you'll always be able to access your funds from another device or wallet.
- These wallets will depend on the company that is responsible for the security of the cryptocurrencies.
- To access them, there's a registration process and credentials.
- Some simpler and more modern ones offer the option to quote, buy, sell, send, and receive cryptocurrencies quickly and securely.