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CRYPTOCURRENCY WALLET – WHAT TO CHOOSE AND WHERE TO SET IT?
A cryptocurrency wallet is a place to store and save a private key, i.e. a string of characters authorizing you to send virtual currencies. It is worth knowing that cryptocurrencies are not “physically” there. The cryptocurrency wallet can only contain numerical data recorded in a chronological database, the so-called blockchain. It should also be emphasized that each transaction must be signed with a private key. All people who know the private key have unlimited access to the cryptocurrencies assigned to it.
Wallet for all cryptocurrencies
The cryptocurrency wallet in which we could store all the coins does not exist. Of course, such a solution would be extremely convenient, but it is very difficult to implement, if only for technical reasons. It is worth knowing that each of the individual cryptocurrencies works differently. They have a separate, autonomous system. Of course, there are cryptocurrency wallets that allow the user to handle a lot of digital coins, but no one that allows you to store all the possible coins that have been created.
Types of cryptocurrency wallets
Online cryptocurrency wallet (hot wallet)
An online cryptocurrency wallet can be classified as the least secure because it is connected to the boarding school, which in turn allows hacking and hijacking of private keys by unwanted people. When using this type of cryptocurrency wallet, you should take advantage of additional security so as not to fall victim to hacker attacks. Of course, there are also advantages to having this cryptocurrency wallet. First of all, it is free. It also does not require verification with documents. In some cases, however, an e-mail address must be provided. The online cryptocurrency wallet belongs to the most numerous group of wallets. However, it is not recommended to store large amounts of funds on them, as it is easy to lose control of them. Stealing funds from such a wallet is easier than from a hardware or paper wallet.
Types of online cryptocurrency wallets (hot wallet):
- Mobile cryptocurrency wallet – in the form of an application for a tablet or phone (smartphone). A portable cryptocurrency wallet allows you to make quick transactions, e.g. in shops or restaurants, by scanning a QR code. However, the level of security is average. Wallets of this type are not recommended for storing more cryptocurrencies.
- Browser cryptocurrency wallet – it is available both from a computer and a mobile device via a browser. The main advantage of using this type of cryptocurrency wallet is convenience. However, it is worth knowing that you can very quickly lose control over your digital currencies, because in this case we do not have private keys. This type of cryptocurrency wallet is only recommended for people who want to trade cryptocurrencies in small amounts and in a short time. Due to the fact that a given entity has our private keys, it is not a safe way to store funds.
- Desktop cryptocurrency wallet – this is an application that must be downloaded and installed on your computer. These wallets can be divided into lightweight (the ones in which the blockchain is stored on external servers, they are fast and accessible) and full (they download the entire blockchain to the computer, which contributes to longer synchronization time and greater disk needs).
Offline cryptocurrency wallets (cold wallet)
Offline cryptocurrency wallets are classified as the safest group, because the cryptocurrencies stored on them are separated from the boarding school. This prevents third parties from taking over the funds. However, this group is small, we can only divide it into two categories.
Types of offline cryptocurrency wallets (cold wallet):
USB cryptocurrency wallet
It is also called a hardware wallet. The USB cryptocurrency wallet looks like a flash drive. Dedicated software is installed on it, which allows you to manage the accumulated cryptocurrencies. In order to perform a transaction, the device must be connected to a computer or laptop. Everything is done in an isolated environment inside your wallet. Signed and encrypted transactions are then passed on. It is worth adding that private keys do not leave the device. This type of mechanism allows the use of USB cryptocurrency wallets even on computers infected with viruses. In addition, the hardware allows you to create backups. The big advantage is that the content can be recovered in the event of loss or damage to the wallet. Please note that each transfer requires authorization with a PIN entered manually. Due to the highest level of security, these types of wallets are dedicated to the long-term storage of cryptocurrencies. The only drawback is that they are moderately comfortable, of course you can also use them for everyday transfers. USB cryptocurrency wallets give you complete control over your private key. It is located in the device and only its owner has access to it.
Paper cryptocurrency wallet
A form of a cold wallet, working offline. It is nothing but a piece of paper on which we print both our public key and private key. The card should be well secured, it is best to keep it in a safe and not share it with anyone. It is also a good idea to make a copy in case the original is damaged. The advantage of a paper cryptocurrency wallet is a high level of security, due to the offline mode and ease of execution consisting in randomly generating a string of characters. It should also be added that they are free. The disadvantages include the convenience of use. To perform transactions, you must first import the private key to the application or the private key. It should also be mentioned that only one type of cryptocurrency can be stored in this type of wallet.
The most popular cryptocurrency wallets
Online cryptocurrency wallets:
mobile cryptocurrency wallets:
-Mycelium (Android) -Breadwallet (iOS) -Copay (Windows Phone) -Xapo (Android, iOS)
browser cryptocurrency wallets
-Paxful -Coinbase -Circle -Blockchain
desktop cryptocurrency wallets
–Electrum -Bitcoin Core -Armory
Offline cryptocurrency wallets
cryptocurrency wallets USB
–Trezor – Ledger
paper cryptocurrency wallets
-bitaddress.org -liteaddress.org (for Litecoin)
We can, of course, enter the cryptocurrency wallet password into the Internet and you will get tons of results, but remember! Always check the reviews before downloading the software. And download only from official websites.
