Types of Cryptocurrency Wallets

Hello guys, How are you ?

I hope you are all well...

I am also fine, Now I Discusse about Different type of Crypto Wallet

@Kawser199

What is a crypto wallet?

In short, a crypto wallet is a tool you can use to interact with blockchain networks. There are different types of crypto wallets. Types of crypto wallets can be divided into 3 parts; Namely- software wallet, hardware wallet and paper wallet.

In addition, the wallets are divided into two types of work, namely - hot wallet and cloud wallet.

Most crypto wallet providers are software based. The reason is special; Software wallets are easier to use than hardware wallets. However, hardware wallets are more secure than other wallets. And the paper wallet is a printed paper with your wallet information QR code, where your wallet is from "Address and Key". The use of which is very low.



How does a crypto wallet work?

Most believe that crypto wallet; No cryptocurrency stores or deposits. Rather, it is a tool through which to interact with the blockchain. In other words, wallets generate the information needed for cryptocurrency transactions through blockchains. Which requires a public and private address.

Wallets are made with two addresses. One is a public address and the other is a private address. In between you can share your public address to send or receive crypto. But never share the "private key". Always store the "private key" in a safe place.

"Private Key" is an address by which you can control your wallet. Anyone who knows this private will get access to your wallet. So always be careful about this.

Hot Wallet Vs. Claude Wallet

Hot wallet that is connected to the internet. In other words, this wallet is connected to the Internet in one way or another. For example, when you open an account in Binance and transfer any funds to deposit there, you transfer it to Binance's hot wallet. The hot wallet is very easy to set up and easy to use.

However, for the safety of the user, a very small amount of funds are kept in the hot wallet.

Cloud Wallet, on the other hand, is a wallet that is not connected to the Internet. Whose private key is always stored offline, to protect against online hacking. However, using this wallet is a little troublesome. Those who usually make large investments and hold for a long time, use it.

Software wallet

There are different types of software wallets. And most of the wallets are internet connected i.e. hot wallet. We will discuss the different types of wallets that are used in the software wallet, such as web wallet, desktop wallet and mobile wallet.

Web wallets

Web Wallets is a very simple and easy wallet that allows you to easily connect to the blockchain through the browser interface, without having to download or install anything. Web wallet refers to Exchange Wallet and some browser based wallets.

Web wallets are usually created using your email and unique password. This wallet is convenient for new users. Web wallets do not usually provide "private keys" to users. This means that the "private key" of your wallet remains with the third party. However, some web wallet providers now provide the user with a "private key", while in some cases the control of the wallet is shared with the user in a multisignature manner.

However, when you use a web wallet, do not neglect its security. For example, if you put in an exchange, for example, a binary exchange; But be sure to check out the important points about cryptocurrency exchanges. In addition, if you put it in other browser based wallets, you will set all the types of security options they have, such as 2FA, phishing code, etc.

Desktop wallets

As the name implies, it is a software wallet that can be installed on your personal computer. There are two types of desktop wallets. A type of desktop wallet where the "private key" is not given to the user. The second type is the desktop wallet which gives you complete control over your wallet.

When a wallet is created by installing wallet software that gives the wallet user complete control of the wallet, a file called "wallet.dat" is created. Which can be encrypted with a password.

However, when you keep these wallets encrypted with passwords, keep those passwords very carefully. Because you have to give this password every time you go to make a transaction. If you lose your password in any way, you will lose your funds.

However, you can back up the "private key" or "seed phrase" of these wallets. So if you lose your password or "wallet.dat" file in any way, don't lose your funds. However, you need to be careful not to lose your password or "wallet.dat" file.

Mobile wallets

Mobile wallets are just like desktop wallets. Which has only been made for smart phones. Mobile wallet is very convenient for everyone to send and receive cryptocurrency. Because, it is very easy to transact with these wallets using QR code. Due to which this wallet is quite popular among smartphone users.

Trust Wallet is a popular mobile wallet in Binance. You can use this wallet to store cryptocurrencies and trade from there. However, caution is needed when using a mobile wallet. Because there are different types of apps on mobile. So there are many apps that are harmful for your mobile. For this, when using mobile wallet, encrypt your wallet using password. Also back up the "Private Key" or "Seed Phrase" to a safe place. This will keep you safe from any unwanted damage.

Hardware Wallet

Hardware is a physical electronic device that generates public and private keys using RNG (Random Number Generator). And this "privacy key" is stored inside the device, which is never connected to the Internet. Hardware wallet is also considered as a kind of cloud wallet account. Due to which this wallet is considered to be more secure.

Hardware wallets are considered to be much safer from the attacks of online hackers. However, there may be a risk due to firmware errors.

Using a hardware wallet is a bit complicated. Which is why this wallet is not user friendly.

However, if you make a large investment and wish to hold your cryptocurrency for a long time, you can use this wallet. Because as I said before, this wallet is a more secure wallet.

Most hardware wallets have the advantage of using a PIN to secure your funds. Also the hardware wallet gives you the recovery phrase when you set it up for the first time. If your wallet is damaged for any reason, you can recover your account with that recovery phrase. The Ledger Nano S / X is one of the hardware wallets.

Paper wallet

First of all, the paper wallet is the one that physically prints your wallet information in a paper in QR code form. You can do cryptocurrency transactions by scanning that QR code.

Some paper wallet websites will allow you to download their codes to generate new addresses and private keys while you are offline. As a result, all these accounts are much safer from online hacking. Such a wallet can also be considered as a kind of cloud wallet.

However, these paper wallets are a big problem, so many people discourage the use of such wallets. And the problem is that you can't make broken transactions from these wallets.

Problems understanding? Let's clear up the matter very easily with a small example.

Suppose you have 5 bitcoins in your paper wallet. Now because of your need you want to send these 5 bitcoins to 1 bitcoin somewhere. However, you cannot send this 1 bitcoin directly from your paper wallet. To spend this 1 bitcoin, first you need to send those 5 bitcoins to another wallet, such as software wallet or hardware wallet. Then you can spend 1 bitcoin from there.

In short, the amount of balance you keep in a paper wallet has to be sent somewhere in a single transaction. Cannot do more than one transaction by breaking down.

Technically, when you import the private key from your paper wallet to a desktop wallet, your total balance will go from there to a few transactions; Your remaining balance will then be automatically transferred to the ‘new address’ created via the Bitcoin protocol. If you do not set the changed address (new address) here manually, you will lose your entire fund.

The issue is a bit more complicated for ordinary users like us. And that is why many people do not encourage the use of this paper wallet. And if you are using a paper wallet, it is advisable not to use a wallet more than once

Thanks for Reading............

@TheRandomRewarder Thanks for your Tipping..

Sir,@RogerVer @MarcDeMesel

@georgedonnelly @tula_sThank you so much....