What is a crypto wallet?
A crypto wallet is a tool that is used to interact with a blockchain network. They make it possible to send and receive cryptocurrencies for blockchain transactions.
Each wallet has a unique alphanumeric identifier called the wallet address which is based on the public and private keys. The address can be publicly shared so that funds can be transferred to the specific ‘location’ on the blockchain that the address denotes.
What are the different kinds of wallets?
This is a wallet that is connected to the internet. The assets kept in these can be very quickly accessed, making them suitable for traders and others who need fast funds, however it also makes them more vulnerable to attacks.
These wallets are not connected to the internet and store the keys offline. The owner will face delays in accessing their assets, however, they will be much safer than they are in a hot wallet. The enhanced security and lagged fund access, make these wallets suitable for longer term storage.
There are many different kinds of but these are the most common:
- Desktop Wallets:
This is desktop-based, meaning that the software is downloaded onto your computer and operates locally on your machine. With these wallets the user has complete control over the keys and funds. In general these are considered safer than web-based versions, however your computer and assets can still be vulnerable to viruses and loss.
- Mobile Wallets:
As the name suggests, these are mobile based wallets. More specifically, these are smartphone applications and make use of QR codes to send and receive funds. As they are very convenient and readily available, making them suitable for carrying out every-day, real-life transactions.
- Web Wallets:
These are accessed and used through a web browser. It includes exchange wallets. Some providers allow users to have full key control and others have partial management.
These are real physical, electronic devices which can generate and store the public and private keys. As they don’t connect to the internet they are also considered a type of cold wallet. Although these devices are secure to cyber-attacks, there are still security risks in the management, implementation and safekeeping of them within the company. As they are cold wallets the funds are also not immediately accessible.
These are physical pieces of paper on which the keys and wallet address are printed. They are printed in the form of QR codes which should be scanned to carry out a transaction. A major issue with these wallets is that they only allow the transfer of the full balance in the wallet, partial transfers are not possible. These wallets are considered flawed in many ways and also unsafe.