What are the different types of Wallets?

May 10, 2021 1 min read
What are the different types of Wallets?

Desktop wallets were made to be used on a desktop computer or laptop and can be installed on many operating systems (Windows, Mac, and Linux). You can simply download the wallet you desire from the web and follow the instructions on how to install it. These wallets enable easy access from a computer when offline.

Web wallets are those which can be accessed only via the internet. They are easy to use as you do not have to download them and everything is taken care of by the provider. Web wallets do have some disadvantages, in that they are actively connected to the internet (i.e. they are ‘hot wallets’). This means one has to be careful with the applications they are interacting with. Some web wallets are also custodial, which means that users trust a company to hold keys on their behalf. This may seem like a convenient option but one has to exercise caution in verifying the reputation of the company and the terms they are agreeing to. As a general guideline, it is better to educate oneself and hold private keys independently.

Hardware wallets are small devices, similar to USB drives, that can store private keys. They are the safest way to send, receive or hold cryptocurrencies, as they are portable and also offline. Depending on design, hardware wallets feature small LCD screens and buttons which can be used to navigate options. They need to be physically plugged into a computer to be put to use.

The simplest way to store cryptocurrencies is to use a ‘paper wallet’. This can take the form of physically writing down or printing one’s private key on paper. The key can also take the form of a QR code or a key phrase depending on other complimentary online services which can generate the same.

As a general security guideline, it is best to use a minimum number of services or providers when generating or storing one’s address or key pair.

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