Today I will be discussing briefly on the types of cryptocurrency wallets available. Here is a template for our discussion:
Article content
● What is a cryptocurrency wallet?
● Types of cryptocurrency wallets
● Mobile wallets
● Desktop Wallets
● Online wallet
● Hardware Wallet
● Paper wallet
● Characteristics of a cryptocurrency wallet?
● Easy to use
● Security
● Wallet control
● Factors to Consider When choosing a wallet for cryptocurrencies?
● Cryptocurrency wallet security
● Private keys
● Google Two Factor Authentication (2FA)
● Keyword and wallet backup
● Conclusion
The world of virtual currencies has brought incredible innovations. These innovations include, for example, cryptocurrency wallets. We all know cryptocurrencies as a digital asset designed to function as a medium of exchange, but in addition to emerging as an alternative to many traditional methods, it is also a fundamental part of blockchain technology .
The absence of a cryptocurrency wallet would make it difficult to access digital currencies like Ethereum, Bitcoin, Tron, etc. In addition, it would be difficult to send, store, receive or track them, which is why it is advisable for each individual who owns digital assets to have their cryptocurrency wallet and know how to use them to get the most out of it.
What is a cryptocurrency wallet?
A cryptocurrency wallet or wallet is software that allows users to store, send, receive, and track digital currencies.
In order for the mentioned processes to be successful, the software allows users to store public and private keys and work with different blockchains.
The blockchain, therefore, keeps the transaction data stored, while the cryptocurrency wallets act as a safe deposit box containing digital keys in the form of codes.
● Types of cryptocurrency wallets
There are different types of storage for cryptocurrencies such as:
● Mobile wallets
Nowadays mobile phones have become indispensable for the human being. Cryptocurrency wallets compatible with mobile devices have the advantage of offering a form of payment and storage of this type of currency anywhere.
● Desktop Wallets
Desktop wallets, on the other hand, are a type of wallets that are installed on a computer and provide users with access and full control over their cryptocurrencies, this type of wallets is widely used due to their convenience as they increase security with regarding mobile wallets.
A mobile wallet, when it can be transported, runs the risk that the device that contains it will be broken, lost, stolen ... and if the wallet data has not been backed up, the cryptocurrencies stored in it could be lost.
● Online wallet
An online wallet is different from other wallets since you do not need to install any type of software on your computer. One of the advantages of this digital storage is that it can be easily accessed from any device connected to the network, therefore it is very efficient.
However, like everything that has a remote access, it faces security challenges, that is why people who use these wallets require the implementation of additional methods of protection.
● Hardware Wallet
A Hardware Wallet is a device that is not connected to the internet, so it offers extra security, these devices store the private keys and in order to use them they require that the wallet be connected to the Internet in order to send and receive cryptocurrencies.
The time that these wallets are not used are disconnected from the network, so the risk of hacks is drastically reduced.
Its only negative point is the price, since the rest of online, desktop and mobile wallets are usually free, but it is a price that is worth paying if we want our cryptocurrencies to be more secure.
● Paper wallet
When generating a paper wallet or paper wallet, what is being generated is a public key and a private key within a blockchain.
These keys are normally printed or written on paper (although it can be done on other types of materials), on many occasions when creating these wallets, in addition to the public and private keys, a QR code is generated that contains these data, in order to read them with the mobile.
Before owning a cryptocurrency wallet, it is essential to study the type of security available, especially since most online wallets suffer from security breaches.
A paper wallet will never be connected to the internet, so it is one of the safest ways to store cryptocurrencies, although its main disadvantage is the fragility of the material used to store it, since it can burn, break, get wet, get lost ...
● Characteristics of a cryptocurrency wallet?
● Easy to use
In general, cryptocurrency wallets have a similar use, since their main function is to send, receive and store cryptocurrencies.
What may vary is the interface used by the wallet or the device from which it is used, this simple detail can make the wallet easy or difficult to use.
● Security
Security in a virtual wallet is the responsibility of the user, since he is in charge of making sure that he is downloading a legitimate wallet, that he is using secure passwords and is saving them in a place that is difficult to access, he has a backup of all of them, avoid repeating the same password in different wallets, etc.
Checking if the wallet has been hacked, if it is constantly updated, the opinion of the users who have tried it, is also highly valuable information.
In any case, the end user is in charge of adding all the security levels that he deems necessary to protect his investment.
● Wallet control
Wallets have 2 types of keys, a public key and a private key , in some cryptocurrency wallets, such as those offered by Exchanges, these private keys are held by the exchange platform and not by the user, which means that they are not you have full control of the assets deposited on that platform.
This key, in addition to giving us total control of our cryptocurrencies, will sometimes be necessary if we want to benefit from different events, such as a hard fork or an airdrop, in the case of exchange wallets we only benefit from these events if they wish deliver the rewards.
● Factors to Consider When choosing a wallet for cryptocurrencies?
Depending on the type of investment you intend to make, you should choose a cryptocurrency wallet or another.
The Holders (investors who do not sell their criptomonedas and store) can use a physical wallet (cold wallet) or a virtual wallet which have immediate access, however it is recommended the first option as the risk of hacking is reduced to the minimum expression.
The Traders (Investors who use exchanges to exchange criptomonedas) normally used for criptomonedas purses using exchange platforms criptodivisas to have their most accessible active when making a trade.
For mixed investors (tradean coins, but they hold others) that is usually most, ideally stored in one or more exchages the criptomonedas they will use to exchange and store in a virtual wallet or a cold wallet the assets to be stored.
● Cryptocurrency wallet security
The wallets of criptomonedas have different levels of security , in addition to which the user must add itself. Let's see the most common.
● Private keys
The private keys are associated with a cryptocurrency wallet, and they are alphanumeric keys that create a password, this password will be necessary to access your cryptocurrency wallet and when the owner of the wallet wishes to carry out transactions.
In simple terms, a private key is the password that unlocks the wallet and allows access to it.
The greater the number of characters, symbols, uppercase, lowercase, etc. If you have this password, the security level of the wallet increases.
● Google Two Factor Authentication (2FA)
A private key is a good measure to protect your cryptocurrency wallets, but for added security it is highly recommended to add Google's two-factor verification as it is a secure way to block hackers.
Every time users try to log into their accounts, in addition to their password or private key, they will need a Google code that will be sent to their owner's mobile phone. With the correct code, the user can easily log into their account.
This code changes after a few seconds, so the increase in security using 2FA is incredible.
Not all wallets offer the service of 2FA , so if you use the wallet does not, can consider switching to another wallet or increase security through safer passwords.
● Keyword and wallet backup
Making backup copies of wallets and private keys and passwords is essential to have a secure investment in cryptocurrencies. This type of backup is advisable to carry out on devices external to the computer, mobile or device that contains the wallet that stores the cryptocurrencies.
Losing your mobile, a hard drive failure, formatting the computer, there are many ways to lose access to our cryptocurrency wallet , it is these backup copies that will make it possible to access our assets again.
● Conclusion
There is no perfect cryptocurrency wallet for everyone, since each person has specific needs and these vary depending on the moment.
While some may need to have access to the wallet constantly to make asset movements and will opt for a mobile wallet, others may prefer that their wallets do not leave their home and will use a desktop wallet.
The most obsessed with security will use paper wallets and hide them in different places and others will prefer the comfort of an online wallet to be able to access from anywhere.
Hardware wallets, Paper Wallets, Online Wallets, desktop wallets or mobile wallets, in short, all of them are useful and have their use applications, the most important thing is to use them correctly and remember that the security level of these wallets on many occasions it is up to the user.
All cryptocurrency wallets have the functions of sending, receiving and storing crypto, so to choose one or the other, the first step is to decide what type of investor you want to be.
All cryptocurrency wallets have 2 keys, one public (address) and one private, but depending on which wallet we use, we only have control of one of them.
The more security measures we take when protecting a cryptocurrency wallet, the more difficult it will be to suffer a hack, here are some security recommendations:
Don't use short or easily memorable passwords .
Save the keys on a pendrive or external hard drive , not on the computer where you carry out the operations, since if your computer is hacked they will have access to them.
Make a backup copy of your keys.
If possible, activate a second security factor , either by SMS, Google authenticator or email, almost all exchanges allow you to activate one or more.
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