Cryptocurrencies just like your conventional currencies has to be stored and transacted on and through a wallet, nevertheless unlike the paper currencies that can be stored in vault or in your purse and wallets, cryptocurrency wallets donâ€™t just serve as a medium for storage but a medium of communication with the blockchain network to enhance transactions, there are three main wallets which are hardware, software and paper wallets, based on their classification, software wallets are easily accessible, while hardware wallets are highly secure and paper wallets are no longer in use due to some flaws, in technicality cryptocurrency wallets donâ€™t store cryptos instead they serve as an interaction tool with the blockchain network to generate necessary information to receive and send money on the network, these wallets are combination of public addresses and private key, wallets can be classified based on the method and location of storage, hence we would be covering some of the Â commonly used cryptocurrency wallets and how they function below;
HARDWARE WALLETS: this wallet consists of a hardware device that individually handles public addresses and private keys, it looks like a USB (Universal Serial Bus) with an OLED (organic light emitting diode) screen and side buttons, this wallet has proven to be quite secure and reliable, they can be accessed by your PC or native desktop apps, nonetheless they can confirm to be a bit difficult for beginners to use when the investment is quite significant.
HOT AND COLD WALLETS: Connectivity to the internet defines a wallet whether its hot or cold, Hot wallets as expected are connected to the internet they are riskier compared to the cold-wallets but invariably user-friendly, while cold wallets are stored offline and donâ€™t require internet connectivity while in turn proves to be less risky. Since hot wallets are easily accessible it is commonly used by traders and its easy to set up. In contrast, the cold wallet would suffice in a situation where a huge amount is to be stored for a longer time and is mostly used by HODLers, and is hack-resistant.
PAPER WALLETS: paper wallets consist of a physically printed QR barcode wallet, some allow downloading code to generate new addresses offline, they are not prone to attacks but limit partial funds thus they canâ€™t be reused, they are popular for cold storage.
MOBILE WALLETS: These types of wallets are specifically made for smartphones, they are very convenient because they use QR codes to transact, and they are ideal for daily usage and transactions but susceptible to malware infections, which makes encryption of mobile wallets very necessary.
DESKTOP WALLETS: They are more like mobile wallets but explicitly made for computers, they are the third most secure way to store cryptocurrencies and the best method for cold storage is in a completely clean system, they give privacy and anonymity, they are easy to use and involve no third party, regular backing up of the computer used is also necessary.
Knowing which wallet best fits your needs is vital to enable you to use your crypto conveniently or store it safely for the long run, Â if you wish to swap your cryptocurrencies fast and easily into your wallets directly, visit @Swapbit.
Disclaimer: Cryptocurrencies are highly volatile, hence trading and investing in cryptocurrencies requires a piece of in-depth knowledge and discretion to avoid excessive losses.