Cryptocurrency wallets keep the secure passwords needed to access cryptocurrencies
Just like your traditional currency notes, you just can’t fold your Bitcoin, Ethereum, Dogecoin or any other crypto holdings and put them in your wallet. So, how do you protect the digital coins you own? You can do so with the help of a cryptocurrency wallet. They exist in a variety of formats, from hardware wallets — a physical device — to apps that you can run on a smartphone or computer. These wallets keep your private keys – the password that gives you access to the cryptocurrency – safe and accessible.
Here are the types of crypto wallets:
There are three main types of crypto wallets you can choose from – paper wallets, hardware or physical wallets, software or online wallets.
Paper wallet: Here, you can record your private key on a tangible medium, such as paper, and store it in a secure location. However, this is not safe, especially if you are someone who likes to leave pieces of paper scattered all over the house.
Hardware wallet: Also known as a physical wallet, here keys are stored in a device that is kept in a secure location and is only connected to a computer when you want to use your cryptocurrency. Like paper wallets, even hardware wallets are at risk of being lost or destroyed.
Software or online wallet: In these wallets, the private key is stored in another application or software or in an online wallet. This allows you to send, receive, and use cryptocurrency in the same way you would conduct transactions in an online bank account.
Software wallets are an example of hot storage, while the other two types of wallets – paper and hardware – are also known as cold storage. In other words, hot wallets are those that are connected to the Internet and can be used to pay for items instantly and acquire additional cryptocurrencies in real time. However, when it comes to cold storage wallets, all they do is hold the private keys.
One thing to keep in mind is that if you lose your private key, you will lose access to all your cryptocurrencies. Therefore, it is important to keep your hardware wallet secure or use a reliable service in case you are using a software wallet.
The simplest way to start your crypto journey is to use an online wallet provided by a major exchange that offers a combination of security and accessibility. However, because your personal information is stored online, your safety from hackers is limited to the security of your wallet provider. So look for measures like two-factor authentication when using online wallets.
Finally, whatever you choose, make sure you know where your private key is and that you’ve kept your wallet password safe. You don’t want to lose your crypto just because you misplaced your keys.
