Different Types of Crypto Wallets

A way to manage, secure, and use cryptocurrencies such as Bitcoin (CRYPTO:BTC) and Ethereum (CRYPTO:ETH) and other digital assets based on a blockchain (for example, an NFT) is a crypto wallet.

Software wallets and hardware wallets are the two types of blockchain wallets. The software wallets include Web (or crypto exchange) wallets, mobile wallets, and desktop wallets. A hardware wallet is a physical device that secures access to your cryptos offline.

Let’s take a look at the different types of Crypto wallets.

• Web-based wallets

These are easy-to-use wallets like those hosted by an exchange where you can buy and sell cryptocurrencies. Security keys are stored and managed by the wallet provider themselves. As an example, if you buy crypto using Coinbase Global (NASDAQ:COIN), security keys that manage access to the assets are held in a Web-based wallet that is always connected to the Internet (known as hot storage). There are security issues with this (for example, if the exchange gets hacked), but this type of storage provides some of the easiest options for managing crypto transactions and purchasing cryptos.

• Mobile wallets

The software on a smartphone or tablet is a mobile wallet. Some of these apps are non-hosted, meaning you will be responsible for saving and managing your private key to access your cryptos. Popular options include Coinbase wallet (a separate app from the hosted custodial exchange), Mycelium, and Trust Wallet (which is part of the top crypto exchange Binance). Mobile wallets often provide hot storage since they can be linked to exchange, but some may provide added security with offline options (known as cold storage).

• Desktop wallets

The software for PC users is a desktop wallet. Examples include MetaMask, Exodus, and Electrum. Many of these blockchain wallets offer cold storage options for added security.

• Hardware wallets

A hardware wallet takes security a step further and allows for access to your cryptos to be stored on an offline piece of hardware. The wallet can be connected to a computer via USB or other port to facilitate transfers and transactions but are otherwise a way to keep crypto access in cold storage. This offers the highest level of security, but you will be responsible for keeping track of your security keys. Popular hardware wallets are made by Ledger and Trezor.

• Secure crypto fund

Any form of currency that exists digitally or virtually and uses cryptography to secure transactions in cryptocurrency. Cryptocurrencies do not have a central issuing or regulating authority; instead, they use a decentralized system to record transactions and issue new units. Cryptocurrencies run on a distributed public ledger called blockchain, a record of all transactions updated and held by currency holders.

Units of cryptocurrency are created through a process called mining, which involves using computer power to solve complicated mathematical problems that generate coins. Users can also buy the currencies from brokers and then store and spend them using cryptographic wallets.

If you own cryptocurrency, you do not own anything tangible. What you own is a key that allows you to move a record or a unit of measure from one person to another without a trusted third party.

Cryptocurrencies are built using blockchain technology. Blockchain describes the way transactions are recorded into “blocks” and time-stamped. It is fairly a complex, technical process, but the result is a digital ledger of cryptocurrency transactions that is hard for hackers to tamper with.

In addition, transactions require a two-factor authentication process. For instance, you might be asked to enter a username and password to start a transaction. Then, you might have to enter an authentication code sent via text to your personal cell phone.

Hope this was helpful.