Crypto Wallet

Crypto wallets keep your private keys – the passwords that give you access to your cryptocurrencies – safe and accessible, allowing you to send and receive cryptocurrencies like Bitcoin and Ethereum. They come in many forms, from hardware wallets like Ledger (which looks like a USB stick) to mobile apps like Kairaa Wallet, which makes using crypto as easy as shopping with a credit card online.

Why are crypto wallets important?

Unlike a normal wallet, which can hold actual cash, crypto wallets technically don’t store your crypto. Your holdings live on the blockchain, but can only be accessed using a private key. Your keys prove your ownership of your digital money and allow you to make transactions. If you lose your private keys, you lose access to your money. That’s why it’s important to keep your hardware wallet safe, or use a trusted wallet provider like Kairaa.  

How do you use a crypto wallet?

Crypto wallets range from simple-to-use apps to more complex security solutions. The main types of wallets you can choose from include:

• Paper wallets: Keys are written on a physical medium like paper and stored in a safe place. This of course makes using your crypto harder, because as digital money it can only be used on the internet.
• Hardware wallets: Keys are stored in a thumb-drive device that is kept in a safe place and only connected to a computer when you want to use your crypto. The idea is to try to balance security and convenience.
• Online wallets: Keys are stored in an app or other software – look for one that is protected by two-step encryption. This makes sending, receiving, and using your crypto as easy as using any online banks account, payment system, or brokerage.

Using an app like kairaa Wallet or Exodus gives you easy access to your crypto holdings. You can:

• Manage all your digital assets in one secure place
• Control your own private keys
• Send and receive cryptocurrency to and from anywhere in the world
• Interact with usernames rather than long, hexadecimal “public key” addresses
• Browse apps (decentralized finance apps)
• Shop at stores that accept cryptocurrency

Types of wallets

When you purchase crypto from an exchange, you can technically store the crypto where you purchased it. If you purchase small amounts of cryptocurrency, then you can find it in your accounts initially, like a bank account balance. This is one of the basic crypto wallet categories you get by default when you purchase cryptocurrency. Most important of all, the wallets on the exchanges will also offer certain layers of security. A wallet is a combination of public address and private key. The wallets can be categorized based on the method and location of storage in the following segments:

Hot Wallets

One of the foremost crypto wallet types brings hot wallets to the discussion. Hot wallets are basically the wallets that connect to the internet and generally offer lesser security. On the other hand, hot wallets offer better accessibility due to their connection with the internet. Even if hot wallets are vulnerable to fraudsters and hacker attacks, they are highly user-friendly.

Types of Hot Wallets

Generally, you would find all the software wallets in the hot crypto wallet types. The most common types of hot wallets include mobile wallets, web wallets, and desktop wallets.

Desktop Wallets

Desktop wallets involve downloading an application to your desktop or laptop. The application will help in generating a data file for holding the keys of the users. Users should also create a password for accessing the keys. Desktop wallets offer the advantage of ownership of your key, albeit with risks of physical damage or malware/virus infection.

Web Wallets

Web wallets are one of the prominent types of crypto wallets in the category of hot wallets. You can access the web wallets through a web browser without the need for downloading any specialized software or application. With the help of browser access, web wallets ensure accessibility for crypto assets from any location with your password, a device, and a web browser. In the case of web wallets, the website would have ownership of the keys to your crypto assets. However, alternatives like multi-sig wallets offer a certain level of control to users over their crypto wallets.

Mobile Wallets

Mobile wallets are also one of the crucial crypto wallet categories in hot wallets with functionality similar to desktop wallets. You have to install a mobile application on the phone, which would serve as the hot wallet. Mobile wallets present better flexibility for exchanging funds while presenting some security risks.

Cold Wallets

Cold wallets are another prominent answer to ‘What are the different types of cryptocurrency wallets?’ next to hot wallets. They are basically specific variations of crypto currency wallets that are designed for cold storage. Cold storage implies that the wallets store the crypto tokens of users in offline mode. As a result, they serve as vaults that you can use for everyday transactions. Interestingly, there are some types of cold wallets that connect to the internet even while retaining their basic working functionality.

Types of Cold Wallets

The next important point of discussion regarding crypto wallet types would refer to the variants in the cold wallet category. You can find two common variants of cold wallets such as paper wallets and hardware wallets.

Paper Wallets

The name gives a lot away about paper wallets when it comes to understanding them as one of the types of crypto wallets. Paper wallets are nothing but physical pieces of paper. The paper must contain all the data you would need for accessing the cryptocurrency. Cold wallets generally offer additional security. However, the same does not hold strong in the case of paper wallets. In event of losing the paper document, you have the risk of losing the crypto assets in the wallet. Furthermore, paper wallets also present the setbacks of limitations in sending partial funds easily. In addition, the time-consuming nature of transactions with paper wallets also presents formidable setbacks for their use.

Hardware Wallets

Hardware wallets, on the other hand, truly define the principles of designing a cold wallet. They offer security by completely avoiding the online exposure of private keys. Hardware wallets save private keys on a physical device in an offline environment and work just like a flash drive. Hardware wallets are one of the most easy-to-use crypto wallet types in cold wallets because you can connect them easily to computers or any other device by using a USB drive.