Cryptocurrency wallet is software that helps to store private and public keys. Millions of people use cryptocurrency wallets but few people understand how they work. Wallets can be placed in three categories: software, hardware, and paper.
Software, Hardware, Paper
Software wallets can be downloaded on a computer. They can be only accessed through the device that they are downloaded to. While they offer high levels of security, they may expose owners to cyber security risks if infiltrated by malware and other tools of cyber attacks.
Hardware wallets make transactions online but allow users to store their cryptocurrencies offline. This allows for better security than other types of wallets.
Paper wallets offer significantly higher levels of security. There are different types of paper wallets. A paper wallet may be a physical copy of your keys. It could also be software that is used to make keys to be printed. It is easy to transfer funds with a paper wallet. Funds may be transferred from a software wallet to the public address on a paper wallet. Withdrawals can be made by transferring funds from the paper wallet back to the software wallet.
Offline Wallets and Online Wallets
It is usually safer to store cryptocurrency in offline wallets as it is significantly more difficult for hackers to try and steal cryptocurrency from a medium that is not connected to the internet. Offline wallets cannot be hacked as they are not connected to a private network and do not rely on a third party for security.
It is wise to store small amount of cryptocurrency for use online while storing the majority of your cryptocurrency offline. This way, if an online wallet is compromised, only a small percentage of your cryptocurrency is lost as opposed to all cryptocurrency.
Ledger Nano
Ledger Nano is one of the most popular hardware wallets used by the cryptocurrency community and , in recent times, consumers outside of the classic cryptocurrency community. The wallet has different types of hardware wallets available. The Ledger Nano S is lightweight. It looks just like a flash drive. It can be used even with infected devices due to the fact that bitcoin transactions are signed on the device. The device can be used on Windows, Mac, and Linux. It costs $100 and allows for the storage of multiple currencies. It supports cryptocurrencies such as Bitcoin and Ethereum.
The Ledger Nano X, one of such models , was made to be more effective than the Ledger Nano S. It offers several improvements and features, including (but non exhaustive of) bluetooth, a hundred different applications, and a mobile application. With the new features, users have more choices on how they can interact with their cryptocurrency.
Aesthetically, the hardware wallet is above average. The device is small enough to carry around without much worry about your pocket room. The chips within the device has a great design pattern. The metallic features are not over the top.
Coinbase Wallet
Coinbase wallet is an online software wallet which enables users to easily make transactions online. The wallet is on the coinable cryptocurrency exchange. The wallet has multi-signature and two-factor authentication support. This is a great way to reduce the chances of your cryptocurrency being stolen by cyber criminals. The negative aspects of having a Coinbase wallet is that the wallet essentially belongs to Coinbase. This means that the wallet is subject to risks which may stem from the decisions made by Coinbase on its cyber security measures.
Copay
While Copay Bitcoin wallet only allows for the storage of Bitcoin, which essentially limits the types of coins one can store on the wallet, it has several key advantages that may make the limited choices worth it for some users. Altcoin supporters may find it easier to appreciate the benefits of having a Copay bitcoin wallet. The wallet offers multi-signature accounts and supports multiple wallets. Multi-signature improves the security of cryptocurrency transactions. It allows a group of users to use a single document. It is a generalisation of group and ring signatures.
Trezor
Trezor is a popular hardware wallet manufacturer. The Trezor T hardware wallet has several unique features such as a touch screen and bluetooth functionality. The wallet can be connected to a computer in order to make transactions with your cryptocurrency. It provides a recovery seed which you can use recover cryptocurrency in the event that your wallet is lost, broken, or hacked. Trezor T enables users to hold over a thousand cryptocurrencies.
DropBit
DropBit offers a simple user interface which many users can easily understand in a shorter time space than with other cryptocurrency wallets. With the wallet, Bitcoin can be sent directly to other using phone numbers and twitter usernames. Of course, this may raise some concerns abut security of the system but for many who just want an easy to use medium, it is a blessing in disguise.
Edel is an Editor with a decade of print and digital media experience – specializing in Science, Technology, Finance, Entertainment, and Advertising. He is also a stock and cryptocurrency investor. When Edel is not editing or analyzing charts, you can find him with his DIY lightbox taking timelapses of plants.