Types of Cryptocurrency Wallets

Best Wallets For Cryptocurrency

A cryptocurrency wallet is a secure digital wallet that allows you to store, send, and receive cryptocurrency such as Bitcoin. It is a tool used to interact with a blockchain network.

If you have never used a cryptocurrency wallet or have not yet dived into the world of cryptocurrencies, there are a range of wallet types to choose from. Whether you are looking for a wallet for Bitcoin, Ethereum, Litecoin, Ripple or any other cryptocurrency you know, here are four types of beginner friendly cryptocurrency wallets.

What is a Hot Wallet?

A hot wallet is any wallet connected to the Internet. Depending on your needs, you will probably use a cryptocurrency wallet of some type that is connected to the Internet. 

For instance, when you create an account on Coinbase and send funds to your wallets, you are depositing into Coinbase’s hot wallet. These wallets are easy to set up, and the funds are quickly accessible, making them convenient for beginner users.

Hot wallets are less secure than cold wallets. Having Internet access exposes your wallet to privacy and security threats, but they are much more beginner friendly. 

What is a Cold Wallet?

A cold wallet, opposite to a hot wallet, has no connection to the Internet. Cold wallets work by  using a physical medium to store addresses and private keys offline, making them resistant to online security threats. Cold wallets tend to be a safer alternative to store coins and are more suitable for long-term investors.

If you plan to hold large amounts of cryptocurrencies and keep them for a long time, then you should consider using a hardware wallet such as Trezor. The Trezor wallet has proven to be one of the best options for keeping your Bitcoins safe and secure without an Internet connection. Depending on your commitment to online security, this is a good choice. If you want the greatest security for your Bitcoin investment, or if you are dealing with a lot of high-quality cryptocurrencies in general, then a hardware wallet is a must.

What is a Web Wallet?

A web wallet accesses blockchains through a browser without having to download or install software. Some web wallets hold and manage the private keys on your behalf. This sounds convenient for beginners, however it’s a dangerous practice. If you don’t hold your own private keys, you’re trusting your money to someone else. To fix this issue, many web wallets now allow users to manage their keys. It is important to check the technical approach of each wallet before choosing the most suitable one.

What is a Desktop Wallet?

A desktop wallet is software you download and use locally on your computer. Desktop wallets give you control over your keys and funds. When you generate a new desktop wallet, a file will be stored locally on your computer. This file contains the private key information used to access your cryptocurrency addresses so it is imperative that you encrypt it with a password, backup your wallet and keep it somewhere safe. If you lose your file or forget your password, you will most likely lose access to your funds. Atomic is a great beginner friendly cryptocurrency desktop wallet.

Cryptocurrency wallets are an important part of using Bitcoin and other cryptocurrencies. They make it possible to send and receive funds through blockchain networks. It is crucial to understand how wallets work so that you can find the right beginner friendly cryptocurrency wallet that works for you.