Types of Bitcoin & Cryptocurrencies wallets.

Types of Bitcoin & Cryptocurrencies wallets.

Same as FIAT currencies, we need some place to stored our holdings as a wallet or a bank account. Before owning Bitcoin or any other cryptocurrencies, we need somewhere to store them to. In the case of cryptocurrencies that place is called “Wallet”.

What is a cryptocurrency wallet

A Cryptocurrency wallet is a secure digital or physical software used to store, send and receive digital currency. Wallets interacts with the blockchain to enable transaction between each others, as well monitor their balance. In order to use bitcoin or other cryptocurrency you would need to use a cryptocurrency wallet. 

Wallet Properties

Each wallet is compose of two unique properties: Wallet address and private keys. Wallet address its a long alphanumeric characters that identify the wallet, and is use to send and receive cryptocurrency. Private keys is a sophisticated form of cryptography that allows a user to access to their bitcoin or cryptocurrencies wallets. A private key is an integral aspect of bitcoin and blockchain technology, and its security make up helps to protect a user from theft and unauthorized access to funds.

Types of wallets

Types of wallets: All wallets are classified in two main types, Cold Wallets and Hot Wallets. The difference between both is that hot wallets are connected to internet and cold wallets in the other hand have no connection to internet.

Cold wallets normally are more secure because are not connected a internet, however hot wallets are more user friendly and easy for trade and spending.

1. Online Wallet:

This types of wallets offer more convenience and flexibility, you can access to your holdings from any device and from any place in the world with internet access. Most of this wallets are east to set up, some of them come with desktop and mobile apps for easy access, and most are free.

On the other hand, online wallets are less have lower security. Your private keys are stored in the cloud by the service provider, and you have to trust the host’s security measures. Some of the leading online wallets are attached to exchange such Coinbase.

2. Desktop Wallets:

This type of wallets are installed on your computer and give you control of your private keys. Most of then are free, and easy to set-up. The disadvantage of these types of wallets is that require more maintenance (software updates) and back ups. If your computer gets damage, stolen or hacked and your private keys are not stored elsewhere, you lose your coins.

3. Mobile Wallets:

This types of wallets are available as apps for smartphones and tablets. Flexible for daily purchases on stores or transfer between users. With this types of apps we can send cryptos to a friends in seconds just need to take a shot in your friend QR and is done.  Most of desktop and online wallets mentioned before have mobile versions

4. Hardware Wallets:

Hardware wallets are small devices similar to a pen drive that occasionally connect to the web to enact bitcoin transactions. Common problems with these types of wallets are that it can be stolen, lost, or damage along with coins stored on it. These types or wallets are used to store large amounts of value and most of the time are keep in secure locations such as banks vaults or safety boxes.  Most common wallets are Trazor and Ledger nano.