Having a secure wallet is the most important thing to think about when you buy bitcoin. Of course, you need to make sure that your bitcoins go somewhere safe. Fortunately, there are tons of bitcoin wallets out there that can do just that.
Over the years, cryptocurrency wallets, in general, have evolved so much which means that there are better and safer options nowadays. You can even obtain a specific wallet to suit your trading style. For example, there are wallets that are for people that hold a significant amount of cryptocurrency. There are wallets that are more appealing to people who are new to cryptocurrency. There are also wallets for people who are on-the-go and can’t be bothered to bring their physical cryptocurrency wallet (more on this later) everywhere they go.
The different types of cryptocurrency wallets
As mentioned earlier, there are different kinds of cryptocurrency wallets that appeal to specific trading styles. Cryptocurrency wallets can be categorized into two: hot wallets and cold wallets. Hot wallets are the crypto wallets that are connected to the internet. Cold wallets, although there is an option to connect yourself online, mostly remain offline. These two categories bring upon more kinds of wallets:
Hardware wallets are wallets that are actual physical devices. These cold wallets are built specifically for handling the private keys and public addresses of a trader. They’re kind of like flash drives with a OLED screen and side buttons to help you navigate through the interface of the wallet. Although most hardware wallets are a bit pricey (they’ll set you back at around $70-$150), they’re the most secure wallets out there. They’re perfect for traders who like to buy-and-hold in bulk or those who are holding a significant amount of cryptocurrency. If you’re a trader like that, it’s best to invest in a hardware wallet.
A paper wallet is a literal piece of paper that contains both your private keys and your public addresses. When you generate this kind of cold wallet, two QR codes are created: (1) a public code for the public key—for recieving crypto; and (2) a private code for the private key. You can consider a paper wallet as a cheaper alternative for hardware wallets, but they do come at a different kind of cost. These are much more technical than any other kind of wallet, requiring a higher level of knowledge on their audience. Another problem with paper wallets is that holders cannot withdraw a fractional amount from the wallet—you either have to withdraw everything or withdraw nothing at all. If you decide to withdraw everything, the old paper wallet can no longer be used. This defining characteristic makes it ideal for people who like to HODL—people that want to buy a lot of coins and wait for its value to grow over a significant amount of time.
Desktop wallets are hot wallets that live through applications on a personal computer or laptop. There are available desktop wallets for most operating systems—Mac, Windows, and Linux. They usually come in software packs that have the files required for installation. Since personal computers or laptops are, more often than not, connected to the internet, anti-virus software and anti-malware is highly recommended to keep the security of your wallet intact. This will prevent hackers from ever being able to reach the funds in your wallet. This wallet is ideal for people who are constantly on their laptops—mostly checking on the status of their funds.
Web wallets are hot wallets that are always connected to the internet and they’re accessible via web browsers. These are the kinds of wallets that cryptocurrency exchanges usually give out for free upon registration. The biggest problem with this wallet is that, in most cases, the exchange will be the ones in control of your private keys. That’ll give you less control in terms of being in control of your own funds. But that doesn’t mean that this wallet is completely useless—it’s actually perfect for those who are just starting out in cryptocurrency and for those who are testing out an exchange. With this kind of wallet, it’ll keep your money safe for the time being but once you start investing a lot more money, you might want to consider a more secure option.
Mobile wallets, hot wallets, are downloadable applications for your smartphone. Just like desktop and web wallets, you most likely won’t be in control of your private keys. If ever you lose the ability to access your smartphone (if the memory gets wiped or the phone is broken in general), it can also cause you to lose your funds—so be extra careful with your phone. These wallets are ideal for people who are on-the-go or people who regularly pay for things with bitcoin.
It’s all up to you
The type of wallet you choose all depends on your trading style. With the options shown above, you can choose one that fits the most and you can’t go wrong.