WALLETS

Shape Shape

A Crypto Wallet is useful when it comes to Blockchain Networking. It allows users to manage different cryptocurrencies such as Ethereum and Blockchain. A Crypto Wallet ensures smooth and secure transactions of funds over a cryptographically signed network. The wallet is accessible to users over web devices, where the privacy and identity of the user stay confidential.

PUBLIC AND PRIVATE KEYS

The information generated is composed of multiple private and public keys. These keys aid in generating an alphanumeric identifier called an address. The address can be shared in order to receive funds, but the private keys are supposed to be never disclosed. The private key is used to access cryptocurrency irrespective of whatever device you choose to use. If someone gets access to your private key, there is a high possibility that your account is compromised.

BLOCKCHAIN WALLET TYPES

A Wallet is a combination of Private and Public Keys. Wallets can be distinguished based on the method and location of storage. There are two types of wallets based on private keys;

  •  Hot Wallets

 Internet connectivity defines the nature of a wallet as whether Hot or Cold. Hot wallets are easily accessible digital wallets that ensure an effective transmission of cryptocurrencies. Hot wallets are stored on a cloud along with a private key which makes them less secure as they pose a high-risk factor. Examples; such as CoinBase and Blockchain.Info.

  •  Cold Wallets

Cold-Wallets refer to those wallets which are available offline, where transactions are signed offline and then disclosed online. Such wallets tend to possess high security as they are not stored on some cloud, which minimizes the risk factor. The private key of cold wallets is stored separately in a drive to maintain its confidentiality.

THREE TYPES OF WALLETS

1.      HARDWARE WALLETS

2.      SOFTWARE WALLETS

3.      PAPER WALLETS

1.      HARDWARE WALLETS

A hardware wallet is a type of cold storage drive that individually stores public addresses and keys, typically like a USB. These wallets tend to be similar to portable devices that can be connected to PC and are accessible by native desktop applications. Moreover, these wallets are less prone to malicious attacks which makes them more secure and reliable. In order to make a transaction from your hardware wallet, it has to be plugged into your computer system in order to support a transaction. Examples include; Edge, Keepkey, and Trezor.

2.      SOFTWARE WALLETS

A Software Wallet is a web-based downloadable wallet. These wallets can be accessed through a desktop or mobile device via an Application. Moreover, it could also be accessed online through a web page. Examples include Jaxx, BreadWallet, and Copay. Software wallets can be further categorized into three wallets;

  •   Desktop Wallet

Desktop Wallets are cold wallets in which your private key is stored in a cold server such as your desktop. These wallets can be unplugged from the internet and still support some offline transactions. In such a case, the main server is disconnected, and your desktop acts as a backup server. These wallets are cost-efficient in comparison to other wallets. For example; Electrum is the most popular Desktop Wallet.

  •  Online Wallets

This is another kind of hot wallet that runs on the internet. These wallets are easily accessible to users across any device. In online wallets, the private key is stored online and managed by a third party. An example includes GreenAddress.

  •    Mobile Wallets

Mobile wallets are similar to online wallets but differ when it comes to accessibility. Mobile Wallets are built just for mobile phone use, these wallets have a user-friendly interface that allows users to conduct transactions easily. For example; Mycelium is one of the best mobile wallets.

3.      PAPER WALLETS

A Paper Wallet supports an offline interface to support offline processes for storing cryptocurrencies. This wallet is printed paper that has your private and public keys printed on it, which is accessible by using a QR Code. These wallets are widely used to store massive amounts of cryptocurrencies as paper wallets are secure and reliable.  A paper wallet collaborates with your software wallet to ensure the transfer of funds from your software wallet to the public address shown on your paper wallet. Bitcoin Paper Wallet and MyEtherWallet are two widely used paper wallets.

All Wallets differ in how they cater to their users’ needs. You can choose a wallet as per your own need, but remember to back it up regularly and keep it up to date with the latest software version available.