How actually do things work out for you in the real life? You secure most of your finances in places we term as banks. While, you need a place to store your hard cash in liquid form, where do you think should you be storing your online currency?
The financial system is going through a revolution and the blockchain technology is making cryptocurrency transactions more efficient, more transparent and more global. As investments are on the rise in the world of cryptocurrency, the need for storing has also become eminent.
A cryptocurrency wallet works exactly the way your real bank account works. It stores your digital finances the perfect way.
What is a Cryptocurrency Digital Wallet?
A cryptocurrency wallet is a software program which stores private and public keys and interact with different blockchains enabling users to send, receive and store digital currency. It also helps individual to monitor and track the progress of its cryptocurrency figures.
Every Cryptocurrency wallet contains two keys: A private and a public key. Private keys are basically used to access your wallet. It is like your ATM access key. A public key is one which allows you to send and transact amounts to and fro between different cryptocurrency platforms.
These may include both, hot and cold storage wallets. Today, we are going to discuss on the different types of wallets that one can use in order to perform transactions using cryptocurrency.
There may be single or multi-currency wallet.
Different Types of Cryptocurrency Digital Wallets
When we talk about cryptocurrency wallets, they are classified into two categories. They are either hot storage wallets or they are cold storage wallets. Hot storage wallets are mostly online and therefore, they are at a risk of getting hacked. While a cold storage wallet is mostly offline, which has its perk of being a safer option.
Desktop wallets are hot wallets and they can only be used through a desktop computer or a laptop. Previously, Desktop client Bitcoin core was created for securing bitcoins on your personal computers; however, it inquired individuals to download 100 GB worth of blockchain data which made it personally a non-lucrative option. Thanks to Multibit and Armory, now you can create your online wallet without downloading an ample amount of blockchain information.
While, desktop wallets ensures their security levels are par excellent, smarter hackers have emerged across the Internet. As your desktop or laptop is at a risk of a virus attack, so is your bitcoin client. It is highly advised that you keep your antivirus updated at all times.
While most wallets are difficult to set up, online wallets are considerably a much easier access solution for your cryptocurrency. These are mostly web-based wallets which allow a user to purchase, store and secure cryptocurrency on the go. Since, the wallet is present online, the chances of security hacks are prominent. Your passwords aren’t safe and can ultimately end up getting hacked, your wallets can be cloned and there are many other similar risks.
Localbitcoin and Coinbase are one of such leading platforms that keep your Bitcoin safe and sound and provide easy transaction. However, the only downside of using an online wallet is that the private keys are basically stored in offsite locations such as remote data centers.
Most of the online wallets today become multi-currency. However, you may not find the exotic new coins there. So the easiest way to obtain an exotic coin wallet would be to open an account on a multi-currency exchange (not a CFD/margin tradin one).
With the rise of iOS and Android, mobile application market has taken over the world. And, what more can a user want than its very own Bitcoin stored within their respective smartphone. With the dawn of smartphone technology, mobile wallets have emerged as a credible option. The greatest benefit of using a Mobile Wallet is that it comes with multi signature access and utilizes a variation of security features to ensure that your cryptocurrency is very much secure.
Mobile wallets such as, the Celium basically provides you with a private key. Your app is the gateway for you to log in to your account and access your bitcoins secure in offsite locations.
The good part is that your private key is secure through layers of security so even if you lost it, you can easily recover it.
The upside of using a hardware wallet is security. It is like your personal bank as it is not open to access for anyone. You secure all your bitcoins in a physical hardware device which you can keep with yourself at all times. The downside is, if you lose it, you lose everything digital saved on it. These cold storage cryptocurrency units generate keys only when you need to make a transaction.
Why they are preferred more is pretty much because they are free from malwares and generate keys offline. They give a greater sense of security and you do not have to put yourself through jargons of technicalities to set up accounts. Just power up a device and start transactions.
What Do You Think Works Best For You?
To keep your cryptocurrency secure, you need a wallet and that’s why I find a wallet an essential tool to purchase alongside bitcoins itself. If you are the kind of person who likes to make frequent transactions then my recommendation is that you go with a more hot storage wallet such as online or mobile wallets. However, if you are more of a steady investor, then my recommendation will be to go for the alternative, a cold storage wallet.
If security does matter to you after all, then my preference is Trezor Hardware Bitcoin Ethereum Wallet – Black! What’s yours? ;)