What are cryptocurrency storage devices or wallets?
We will now always find that the crypto currencies are in the
limelight. It is mainly because of their high prices. When you have the desire
to trade using the digital currency, there is one important aspect that you
have to consider. Owning a digital wallet is definitely one of the primary
elements that need to have in order to use the crypto currencies.
What do you know about the crypto currency wallet?
A crypto currency wallet is more or less similar to a bank
account. You can store, receive as well as send your digital currency to
another wallet account. Moreover, you use the wallet for shopping online. A
crypto currency is used to store, receive and send the digital currencies like
the Bitcoin, Ethereum and other crypto currencies.
How do the crypto currencies operate?
There are perhaps millions of people across the globe who use
the crypto currency wallets. Unfortunately, there is a misunderstanding
regarding the way they work and operate. The crypto wallets are not like the
conventional wallets that store the digital currency in the physical form in
any one location.
The existence of the wallets is basically in the form of the
transaction records that take place around the world. All such transactions get
stored in the blockchain. The crypto currency wallet is a software program that
stores both your private as well as public keys. There are various blockchains
involved aiding the users to keep a track on their total balance, send and
receive funds and carry out other functions.
When someone sends you Bitcoins, or any other types of crypto
currencies, the person is giving up his/her ownership of the digital currency
coins and transmitting them to your wallet’s address. In order to send the
coins and unlock the fund transferred, it is important that both the private
key and the public address mentioned in the wallet are the perfect match.
Once the public and the private keys match with each other,
there will be an increase in the balance of your wallet, and the balance in the
sender’s wallet will automatically decrease. In such a transaction, you will
not find any real exchange of the physical coin as it takes place in the
virtual world. The whole transaction record takes place on the blockchain.
The different types of crypto currency wallets
You will come across a wide array of crypto currency wallets,
providing so many varied ways to store and access the digital currency. There
are three main categories of crypto currency wallets. They are:
1.
Software wallets, which are further sub-divided into:
- Desktop
- Mobile
- Online
2.
Hardware wallets
3.
Paper wallets
Let us get into a brief discussion on each:
Software Wallets
A software wallet is a Bitcoin application that positions
itself on the hard disk of a computer, and there is an absolute control and
security. This is because each and every Bitcoin that you hold can be accessed
only via your computer device.
Desktop Wallets
The desktop wallets are basically downloaded and then
installed on your computer device like a laptop or PC. The wallets can be
accessed only from the computer in which they have been downloaded and
installed. It is the desktop wallets that are known to offer the highest
security level. But, in case, your computer system gets hacked, or there is a
crash, you end up losing all your funds.
Mobile Wallet
Online Wallets
The online wallets operate on the cloud. The best part about
such wallets is that they can be accessed from any computing device from around
the world. There is no doubt to the fact that the online wallet is very
convenient to use, but your private keys get stored online and a third party
has the authority over it. This makes it more vulnerable and prone to hacking
and online thefts.
Hardware wallets
If you compare the hardware wallets with the software wallet,
they are different, especially in terms of storing the private keys. In the
hardware wallet, your private key gets stored in a hardware device like a USB.
The transactions that take place using the hardware wallets are not doubt
online, but they are stored offline. Hence, the hardware wallets are considered
to be more secure and safe.
The hardware wallets are known to support varying digital
currencies along with different web interfaces. The compatibility depends on
which currency you are using. Moreover, the entire transaction process is so
easy and hassle free. You simply need to plug in the device to any web enabled
computer or any device, enter the pin, send an amount and then finally confirm.
Thanks to the hardware wallets that enables you to transact money while keeping
it offline and guard against the online thefts.
Paper wallets
The
paper wallets are no doubt very easy to use and also render a very high
security level. The paper wallet can refer to a physical printout or copy of
your public key and a private key. In fact, it can also denote to the software
that is used for generating a pair of printed keys in a secured manner. When
you are using the paper wallet, everything seems quite straightforward.
When
you want to transact any digital currency to your paper wallet, it is catered
by the transferring of the funds from your software wallet to the public
address that is denoted on your paper wallet. Moreover, if you want to withdraw
the currency or spend on something, the process of transferring fund is simple.
You have to transfer from your paper wallet to your software wallet. This
method is referred as “sweeping”. Sweeping can be done in three different ways:
- You can do it manually
- Scanning the QR code on the paper wallet
- Entering the private keys
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| After Login a Online Crypto Wallet |
Are the crypto currency wallets safe and secure?
Well, the crypto currency wallets are secured on the grounds
of the type of wallets you are using. There are different types, including the
desktop, mobile, online and hardware wallets. The security level of the wallet
also depends on the service provider. When a web based wallet is used to store,
receive or send the currency, it is way riskier than the offline wallets.
The online wallets are more vulnerable to hacker and thefts
because of the use of the third party. On the other hand, the offline wallets
are not easy or impossible to hack because they are not connected to any web
network. Moreover, the offline wallets don’t depend on any third party for the
purpose of the security.
There is no doubt to the fact that the online crypto wallets are
more prone to the hacking attacks. But when smart precautionary measures are
implemented and followed as well, the level of security will be quite a
different one. You have to make sure that you don’t lose your private keys,
because despite the type of wallet you use, you will basically end up losing
all your money.
Similar is the case, when your wallet gets hacked and you
without any knowledge send money to a fraud or a scammer, there is practically
no way you can retrieve the lost funds. It is very important that you take the
necessary precautions and safety measures and be careful.
A list of some of the popular and well known crypto currency wallets
There is a wide array of crypto currency wallet list. Before
you pick any one, get to know about them briefly.
Bread wallet
- Lightweight design
- Good security and privacy
- Fast application
- Excellent for beginners as well as experienced users
- Open source software
- Free wallet
- Simple and clean interface
- Lacks the desktop interface
- A hot wallet
Exodus
It is probably one of the unknown digital wallets that can be
accessed only on the desktop. The wallet support the storing, receiving and
trading of the Bitcoins, Litecoins, Dogecoins, Ether and Dash. The interface is
interactive and easy, and therefore the digital currency trade is hassle free.
The in-built Shapeshift exchange allows you to trade Bitcoins for Altcoins and
vice versa without the need to leave the wallet.
Pros:
- Interactive and user friendly interface
- Good security and privacy
- Open source software
- There is no cost for downloading
- The wallet is friendly for beginners
- Multiple currencies can be traded
- Inter wallet trading option
Cons:
- No mobile app
- Lacks the web interface
In case, you are an experienced or an advanced user hunting
for a reliable Bitcoin
digital wallet, Mycelium seems to be a very good option.
The mobile wallet allows both the Android and the iPhone users to trade the
Bitcoins and have a complete authority over the currency. There is no
interference from any third party. What features make Mycelium one of the best
digital wallets in the current market?
Cold Storage Wallets
- An encrypted PDF backup
- A local trading market
- Secure and private chat
- An integrated QR code scanner
Pros:
- Advanced security features
- Open source software
- Free download
- Good security and privacy
Cons
- Not a good option for the beginners
- There is no web interface
Copay
Pros:
- Open source software
- No fees for downloading
- Good level of privacy and security
- Multi-signature transactions
- Supports multiple platforms
- Easy for a beginner to use
Cons:
- Can be slow sometimes
- Doesn’t respond
- Restricted level of user support
Armory
It is a Bitcoin based desktop wallet that is apt for the
advanced level users. Some of the highlighting features of Armory wallet
include:
- Key importing
- Key sweeping
- Multi-wallet interface
- Multi-signature transaction
- Cold storage
- Single time printed backups
- GPU guarded wallet encryption
The beginners might take quite some time to understand and
use to the full potential. But, it is an excellent option for the experienced
and tech savvy Bitcoin users keeping their funds secured.
Pros:
- The download is free
- Good security and privacy
- Multiple signature transaction
- Cold storage
- Excellent security feature
Cons:
- It can be accessed only via the desktop
- It is not meant for the beginners
Green Address
It
is a user friendly Bitcoin digital wallet. In case, you are beginner in the
field, the Green Address is an excellent option to consider. The wallet can be
accessed through the mobile, online and desktop apps available for Android, iOS
and Chrome.
Some
of the highlighting features include:
- A backup with the paper wallet
- Immediate confirmation on the transaction
- Multi-signature addresses
- Dual factor authentication for improved security
Pros:
- A good level of security
- The wallet is friendly for beginners
- Open source software
- Free to download
- Multiple platform support
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Cons:
- Payment approval from the third party
- The privacy is not up to the mark
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