In this article we’re going to talk about cryptocurrencies wallets. We will face all types of wallet to discover this super important tool of the crypto world.

The wallet is the tool to use to interact with a blockchain.

Wallets can be divided into software, hardware and paper wallets. These can be considered Hot or cold wallets.

Let’s start by saying that most wallets are of the software type because they are more practical to use than the others. However, hardware wallets are the safest option, while paper wallets are now an outdated option. But let’s see how it works.

Any wallet allows you to interact with the Blockchain, creating the information necessary to create transactions, receive and send the crypto currencies compatible with the wallet. The wallet does not “physically” contain the coins, but rather the public and private keys to operate on the blockchain and the public address that is created based on public and private keys.

The address is a specific point on the blockchain from which to receive and send coins. Coins never leave the Blockchain but simply change their address.

For this reason, you now understand why the private keys of the wallet should never be revealed. In fact, the private key is the only way to access your coins. In case of a possible loss of your mobile phone, you will be able to access your wallet again with the private key.

Now let’s face the difference between cold and hot Wallet. In fact, wallets can operate in a different way.

A hot wallet is any wallet connected to the Internet. When you create any exchange account and transfer coins from your wallet to the address assigned on that exchange, you are transferring funds to the exchange’s hot wallet, so that your funds are immediately available for trading.

Cold wallets have no Internet connection, so they are safer from cyber attacks and better set up to store coins over the long term.

Now let’s see the different types of wallets and which is the best compromise of use.

Let’s start with the Software wallets, there are of all types and characteristics, and specific by currency. Obviously, the vast majority are connected to the internet, so they are hot wallets. Software wallets are divided into web, desktop and mobile wallets.

 

Web Wallet

With a web wallet, you can access the blockchain with a browser interface without having to download or install anything. The most classic example is the wallet of any exchange.

You create a new wallet and set a password to access it. In the case of an exchange wallet there is no private key, you are entrusting your funds to another person, in this case the exchange

 

Desktop Wallet

The desktop wallet is software that you download and use on your computer.

A desktop wallets give you full control over your keys and funds.

When the desktop wallet is created, in most cases a file called “wallet.dat” is created and stored locally on your computer. This file contains the private key information used to access your addresses, so it must be protected. Remember that if you delete it or lose your computer and don’t have a backup, you lose all the funds on the wallet.

A good solution is to export the private key or seed phrase corresponding to your newly created wallet, so that it can also be used on other devices at a later time. Since the wallet is on your PC, it must be protected from malware or viruses.

 

Mobile Wallets

Mobile wallets are a very similar alternative to desktop wallets but designed for smartphones. They are the most practical wallets for everyday use as they allow you to send and receive crypto by scanning QR codes. The problem of viruses and malware is also present here, so you need to protect your device. In addition, given the daily use of the smartphone, it is necessary to have all the back up of the wallet for any recovery following theft or loss.

 

Hardware Wallets

Hardware wallets are physical electronic devices, not connected to the network except for their use. They generate random numbers to create public and private keys that are stored within them. Their intrinsic greater safety, however, is balanced by a less simple and quick use.

Hardware wallets are used in case you want to keep large amounts of crypto for a long time. The access PIN must always be set and the recovery phrase saved as in web wallets.

 

Paper Wallet

the paper wallet is a piece of paper on which a public address and its private key are physically printed via QR codes. Code scanning allows you to perform cryptocurrency transactions. This kind of wallet can be considered a good alternative to long-term crypto storage, given its resistance to online attacks.

The biggest problem lies in the fact in order to use the paper wallet, the total amount of crypto currencies in it must be moved.

If we have a 15 Bitcoin wallet and we only have to move 3 of them, we will first have to make an intermediate step to another address where you will send all 15 bitcoins, and then from there send the 3 you need. The remaining 12 will then have to be put back safely on another paper wallet

Remember that your paper wallet will be empty after its first outgoing transaction. So don’t hope you can use it again later.

 

As we have already repeated, it is essential for each wallet to have the back up and the seed phrase to recover their wallet in case of problems.

Learn more about safety about your Coin here.