Before I can begin selling and buying cryptocurrencies, I need a cryptocurrency wallet. For those of us who are not aware of what a cryptocurrency wallet is, a cryptocurrency wallet is software designed to help you send, receive and store digital currency, like Doge Coin, safely. A crypto wallet stores a series of my crypto keys and allows me to monitor my cryptocurrencies.
I used to be confused about how crypto wallets work. If you are as confused as I was, then let me break down the concepts for you. First of all, let us define a public key. This is the address of the wallet; it has similarities to a bank account number that other people can use to send coins to our wallet.
On the other hand, a private key is like a pin code. We use the private key to access and manage our funds. It is important that one never loses the private key.
Now that I have explained how crypto wallets work, we need to understand how to choose the best cryptocurrency wallet. To get the best cryptocurrency wallet you need to know the different types of crypto wallets and the security features they offer.
Here are the different types of cryptocurrency wallets and their pros and cons. I will not advise anyone to choose a particular type of crypto wallet; instead, you should also do our own personal research and compare it with the information in this article.
I love hardware wallets because they give us users the chance to store private keys on a separate offline device like a USB. This means that hardware wallets are offline and more secure. When it comes to security then hardware wallets are the most secure. This is because a hardware wallet allows a user to make transactions online, but the keys are stored offline. This means that someone cannot access my hardware wallet without the correct password.
Since hardware wallets are a device, that means that if they can get lost or destroyed. Also, they are a bit pricy compared to other wallet types. The most popular hardware wallets are Ledger Nano S and Trezor because they support many cryptocurrencies.
Desktop wallets are like an app that can be downloaded and installed on a laptop or computer. Desktop wallets have a mnemonic phrase that they provide upon being installed. This is part of the security feature that they offer.
The main disadvantage of desktop wallets is that once a computer is hacked then the money in the wallet can disappear as well.
Mobile wallets are similar to desktop wallets only that mobile wallets are designed to be used on a mobile device. They have added features like QR code scanner. They are the most popular wallets, and this is because almost everybody has a mobile phone. The major cryptocurrencies usually have mobile wallets for Android and iOS.
However, mobile phone wallets are not as secure compared to desktop wallets; this makes them prone to cyber threats, attacks and malware.
Paper wallets offer the safest way of storing cryptocurrency. This is because they offer the offline feature of storing a cryptocurrency, meaning it is hard for your coins to disappear. Paper wallets use a server that requires us to print our QR codes that represent our public and private keys.
Paper wallets still have their downside. They require expertise on how one can make them. This means that not everybody can make them. Any water or environmental damage could lead to one losing all their crypto money. The paper wallets are also not durable, and it is easy for the keys listed there to get misplaced. If the keys get lost, then that means that the investment is also lost.
The only way of knowing how to choose a cryptocurrency wallet is understanding the different types of those wallets as I have explained in the above blog. The most important feature to look out for is security; if that particular type of wallet can be hacked easily, then it is not a good idea to invest in it. All the best as you choose the right wallet.