Whether you have crypto coins or you are planning to have them in the future, a cryptocurrency wallet is your need. Therefore, you need to know what does cryptocurrency wallets do and their different type. It will enable you to choose the correct one according to your requirements.
What is a cryptocurrency wallet?
A cryptocurrency wallet operates like a traditional wallet, but it replaces paper currency with digital cash. It stores private and public keys to sell or purchase cryptocurrencies and offers digital signatures against each transaction. The wallets can be devices, applications, programs, websites, or a service crypto exchanges offer.
Your private keys make your crypto wallet secure, as you cannot unlock your wallet without them for trading or spending.
Why cryptocurrency wallet to trade?
Crypto investors always have a concern about the security of their digital assets. Nowadays, it has become a more serious question when every platform suggests crypto wallets for users. The answer is very simple, cryptocurrency wallets offer their users an address, so they can have control over their accounts and transactions. The majority of them offer password protection, and some of them also offer encryption or two-factor authentication.
Types of Wallets
Cryptocurrency wallets come in multiple formats with their pros and cons in terms of ease to use and security. There, you do not need to look for features; you should explore how they safeguard passwords and access to your digital assets. Following are few types of crypto wallets you can have, depending upon your requirements.
Hot Storage Wallets
Hot storage crypto wallets need an internet connection, and they usually exist in the form of mobile applications, desktop software. These wallets are mostly free but have some security concerns due to internet connectivity. According to recent studies, there was a drop in crypto thefts up to 50% despite an increase in crypto popularity. Still, you need to be careful as the digital wallet in your pocket is connected to the internet, and attackers are keeping an eye on it.
Desktop Crypto wallets are applications that run on a computer to store your crypto assets. Desktop wallets offer you control over your funds and eradicate third-party involvement. As a result, no one can freeze your funds. But it’s your responsibility to take some precautionary measures to secure and back up your wallet. Make sure that your computer is resilient to malware attacks to be on the safer side. Atomic wallet, Electrum, and Bitcoin Core are the most popular wallets in the crypto market.
Mobile cryptocurrency wallets are very common in the market these days as everyone has a mobile phone in his pocket. These wallets have the potential to store and control crypto funds on smartphones. With the increase in demand for crypto wallets, Blockchain development companies have developed wallets for Android and iOS operating systems. Most of them have integrated QR codes to make the transaction faster.
Like desktop wallets, you are responsible for on-time backup to keep your assets safe from damage, either theft or losing the mobile device. Green Address, Bitcoin Wallet, BitPay, and Atomic Wallet are popular mobile having different versions.
Web Wallets offer users trading flexibility either through mobile devices or desktops. Unfortunately, they do not provide full control of your funds. Exchanges like Coinbase and brokerages like Robinhood offer users web crypto wallets.
Cold Storage Wallets
Cold storage wallets are small and encrypted portable devices that allow users to carry their crypto assets. Their cost range is around $100, and they are more secure than hot wallets because assets are stored offline. Trezor and Ledger are the most popular companies that are providing cold wallets ranging from $70 to $200.
A cryptocurrency wallet works around the same principle as a traditional wallet, but it offers more security and control over crypto funds. Cold and hot wallets provide offline and online storage of digital assets depending upon the devices you have. OptimusFox, as a leading blockchain development company, offers its crypto wallet development services making your asset secure.