Increased adoption of cryptocurrency has led to a rise in demand for crypto wallets, the only place where we can store these cryptocurrencies. Having a secure crypto wallet is necessitated by the need to securely save these valuable digital assets.
For all the newbies, crypto wallets are of 5 different types offering different services and fulfilling varying purposes at different times. It is essential to be aware of all of them to be able to choose the one that best suits your needs and is the most secure for your cryptocurrency. It is a fact that “one’s crypto assets are as safe as their wallets”.
Types of Cryptocurrency Wallets
Online Wallets are viewed as the least secure kind of crypto wallets but, they come with some advantages that make them a favorable option for lesser amounts of cryptocurrencies. Commonly known as web wallets or hot wallets, as they run on the cloud can be easily accessible from any device connected to the internet. This implies that internet connectivity will allow you to access, store and transact cryptocurrencies anywhere. Being more convenient, online wallets store your private keys online and are controlled by a third party making them vulnerable to hack attacks and theft.
Benefits of Online Wallets:
- Facilitates quick transactions
- Some are capable of storing and managing multiple cryptocurrencies
- Can be conveniently accessed from anywhere, anytime
- Convenient for active trading
Disadvantages of Online Wallets:
- Vulnerable to cyber crimes like hacking and scams
- Vulnerable to computer viruses
- Cryptos are stored with a third-party and not the real owner
As the name suggests, mobile wallets are accessible by cell phones, stored and run in the form of mobile app. Mobile wallets can be used to make crypto payments with ease in stores etc where cryptocurrencies are accepted. It will become increasingly popular with the greater adoption of cryptocurrencies. Online Wallets also offer mobile versions, but some wallets are designed specifically for cell phones.
Benefits of Mobile Wallets:
- Are comparatively more secure than online wallets
- Offer the convenience of using on the go
- Offer QR code scanning
Disadvantages of Mobile Wallets:
- You’ll lose all your crypto assets if the cell phone is lost or damaged
- Vulnerable to mobile viruses and malware
These wallets are designed to be stored and accessed via single desktop in which they are downloaded. They offer more security than online wallets and are even safer if the computer being used is not or has never been connected to the internet. In the latter situation, these wallets become a cold wallet.
Benefits of Desktop Wallets:
- Convenient for trades who prefer trading cryptos via desktop
- Private keys are with the owner and not a third-party server
- A heightened level of security if the computer has never been connected to the Internet
Disadvantages of Desktop Wallets:
- Cannot access your cryptos from anywhere, anytime
- If connected with Internet, can get a virus or hacked, losing your funds
- If the desktop used for the wallet dies and there is no backup, the cryptos are lost forever
These are advocated to be one of the most secure crypto wallets present at the moment. The private keys are stored in a tangible device like a USB drive, however, it doesn’t restrict making online crypto transactions. Hardware wallets supporting different cryptocurrencies can be compatible with various web interfaces. These wallets are mostly offline and hence, fall in the category of cold wallets.
Benefits of Hardware Wallets:
- Safest Crypto wallets
- Compatible for storing a significant amount of cryptocurrencies that are not required on a daily basis
- Making a transaction is easy
Disadvantages of Hardware Wallets:
- It is one of the most expensive kind of wallets
- Not suitable for beginners due to its comparatively complicated user interface
- Cannot be used on the go
These wallets perfectly meet all the characteristics of a cold wallet providing a high level of security for the digital assets. As the name suggests, paper wallets are made of, you guessed it right, paper! The private and public keys are printed out physically on a paper. Money can be transferred to the public address of these crypto wallets and the cryptocurrencies can be retrieved by entering the private keys mentioned on the paper wallet or scanning the QR code.
Benefits of Paper Wallets:
- Totally hack-proof
- Isn’t stored on an electronic device like a computer or mobile
- Private-keys are not stored in a third-party server
Disadvantages of Paper Wallets:
- People who are not very technically knowledgeable find it hard to use
- Isn’t convenient for daily transactions
- The paper can be easily destroyed through fire, tear, etc.
Being aware of the various kinds of wallets is necessary if you wish to keep your cryptocurrencies secure. However, some wallets, like the Arax Crypto Wallet offer the benefits of most of the crypto wallets with negligible disadvantages and are best fit for all kinds of investors.
Its simple user interface is suitable for beginners who have just stepped into the cryptocurrency realm. It offers a high level of security for avid investors and crypto enthusiasts along with providing multi-blockchain support allowing them to store multiple cryptocurrencies in one wallet.
Not just that, even the private keys of the users are kept with them which can be exported to other wallets if in case the Arax wallet stops operating. The cryptocurrencies of users are saved on Blockchain instead of on the Wallet server, keeping them extremely safe and hack-proof. Arax Wallet offers all the advantages of an online wallet without its drawbacks.