An introduction to Crypto Currency wallets
With the rising popularity of Bitcoin and other crypto currencies, there has also been a massive increase in the methods of storing them. From online wallets and crypto exchanges to hardware and paper wallets, there are any number of choices for new and experienced crypto users and investors alike. Here we introduce the various types of crypto currency wallet and discuss the suitability of each type for each situation before providing a list of recommended wallets particularly suited to use by people who work online on a regular basis.
A crypto currency wallet is essentially a hardware or software device whos primary purpose is to store the public and private keys of one or more crypto currency addresses. Wallets can be as simple as a sheet of paper with several strings of numbers and letters printed on it; a piece of software that runs on a smartphone or personal computer; or a specialized USB device with some memory chips and a small display screen for displaying balances.
No matter which type of crypto wallet a person uses, the underlying purpose and functions are the same. A wallet stores pairs of public and private keys for at least one crypto currency address, and quite often, many more than that. Most wallets have the ability to generate a large number of wallet addresses for the crypto currencies they support.
A wallet allows the owner of crypto coins to send and receive coins to and from other users, and to interact with the blockchain in order to view transactions and check their coin balance.
Choosing a crypto currency wallet
Choosing the right type of crypto wallet can be an important decision, and can be influenced by a number of factors, such as, security, convenience, access to the internet, and cost. Each type of wallet has its own characteristics and can be analysed in terms of each factor to determine its suitability for a user’s purpose. For instance, a crypto user who is constantly online and is dealing with relatively small amounts of crypto currency might find that an online wallet or a desktop wallet on their pc is te most suited to their needs, whereas an investor with large crypto or Bitcoin holdings might be more inclined to use a hardware wallet with a paper wallet as a backup, in order to provide the highest level of security for their investment. Paper wallets are inherently very secure due to their physical nature, and the fact that they are totally “offline”.
Desktop and Mobile wallets
Desktop and mobile (apps for smartphones and tablets) wallets offer a high level of convenience, and make it very easy to conduct transactions, however they generally offer a lower level of security than hardware wallets do. That being said, many desktop wallets do offer various levels of security in the form of passwords, encryption etc, and can generally be deemed to be suitable for storing a modest amount of crypto currency for daily use.
Web and Micro wallets
Web wallets are among the least secure of crypto wallets, as the private keys are often held in a third part database, although this is not always the case. Nevertheless, online wallets do have the advantage of being accessible from any internet connected device, so can be a highly convenient way for travellers to store their currency when on business trips, holidays, and the like. Websites such as Eobot, CoinPot and FaucetHub are examples of web wallets (aka micro wallets), and are unsuitable for long term storage of crypto currency.
Hardware wallets are physical devices that usually connect to a personal computer or mobile device via USB, and hold the public and private keys for a number of crypto currency accounts. Often referred to as ‘cold storage’ because they are not permanently connected to the internet, hardware crypto wallets offer an incredibly high level of security under nrmal conditions, however it is advisable to make a backup copy of the keys in a paper wallet held in a fireproof safe.
A paper wallet is one of the most simple forms of crypto currency wallet that nevertheless affords a very high level of security for crypto investors. As the name suggests, a paper wallet is nothing more than a printed version of a crypto currency wallet. Various websites offer “key generation” services to create public and private keys for crypto wallets, and these can simply be printed out on paper or a more durable material, and then held in a fireproof safe or bank vault for long term, secure storage of Bitcoin and other crypto currencies. It is advisable to make several copies and hold in separate, secure storage locations so that there is no chance of your coins ever being lost. Inexpensive and innovative, paper wallets provide a good backup option for almost every other type of crypto currency wallet.
With the rapid rise of Bitcoin and other crypto currencies, the need has arisen for user friendly crypto currency wallets with good security, and support for an ever expanding range of crypto coins. From online wallets and exchanges, to mobile, desktop, hardware and paper wallets, the range of choice for new and experienced crypto investors is growing day by day. We have discussed the benefits and risks associated with the various types of crypto wallets, and provide a selection of some of the best wallets available across multiple platforms in the table below. You may need to use a number of different wallets depending on your crypto currency usage and the type of coins you need to store.