Crypto Wallet Types Explained

CRYPTO WALLET TYPES
EXPLAINED
101blockchains.com

What is Crypto
Wallet?
Crypto wallets are a type of
digital wallet specifically used for
storing digital currencies. These
are basically applications that
can help you access blockchain
platforms and help you retrieve
and use your crypto assets.
However, crypto wallets
technically do not store digital
currencies like your physical
wallets. It helps to connect to the
blockchain platform that stores
your assets.

Importance of Crypto
Wallets
Offers complete ownership of crypto assets
Offers personalized security for asset safekeeping
Provides faster access and transaction

Types of Crypto
Wallets
Hot Wallets
Cold Wallets

Hot Wallets Hot wallets are a type of crypto wallets that
are always connected to the internet. This
type of wallet is less secured than a Cold
wallet. But these wallets offer more
accessibility.
Easy to use and convenient
Does not need physical storage
Advantages
Prone to cyber attack
Uninstalling the application can lead to
loss of access.
Disadvantages

Cold Wallets
Cold wallets are a type of crypto wallets
that are offline. Typically, they serve as
vaults for your important documents and
assets. Cold wallets are much safer
compared to hot wallets, but accessibility
can be an issue here.
Offers higher security
Stores all assets offline and act as a vault
Advantages
Not suitable for regular payments
If the wallet gets lost, all your assets are lost
Needs backup
Disadvantages

Types of Hot Wallets
Desktop Wallets
Web Wallets
Mobile Wallets

Desktop Wallets Desktop wallets are
downloadable applications for
your laptop or desktop. Here,
users will download the
application and generate key
pairs for safekeeping assets.
Users can also use a password to
safe-keep all of their keys and
assets. Desktop wallets offer full
control over the ownership of
your keys.

Desktop wallets store the keys on the hard drive.
This is one of the most reliable ways to store
ones’ keys.
The program is available on your desktop or
laptop, so you can access the data whenever
you want.
Advantages

The application needs to be regularly updated,
which can take up hard drive memory.
“Thick” desktop wallets will download the full
blockchain on the computer, which is a very
resource-hungry process.
Disadvantages

Web Wallets Web wallets are also another type of hot
wallet. Here, you won’t have to
download any application or software to
access your digital assets.
Also, in web wallets, you can access your
assets from any device or any location.
But the wallet may have slight control
over storing your password or keys.
However, some web wallets may offer
additional control to the users.

The registration process is quick.
Offers anonymity. In many cases, the wallet
may not need any verification.
Can support multiple cryptocurrencies.
Advantages

There may be additional expenditures
involved.
These are connected to cryptocurrency
exchanges. This makes them vulnerable to
hacks.
Disadvantages

Mobile Wallets Mobile wallets are similar to
desktop wallets, but these are
exclusively made for mobile
devices. Here, users need to
install a mobile application,
which will act as a wallet for the
user.
Mobile wallets can offer more
flexibility as they are easy to carry
around, unlike desktops.

Mobile wallets are more secure than web
wallets.
Users can use the wallet on the go.
Can provide additional features such as QR
codes.
Advantages

These do not offer high-security options.
If the device gets lost or stolen during
transportation, the assets may be lost forever.
Disadvantages

Types of Cold Wallets
Paper Wallets
Hardware Wallets

Paper Wallets Paper wallets are a type of cold wallet
where the data for your assets are on
paper. It does help in offering extra
security in terms of online attacks.
But these are extremely vulnerable in
the real world. If the owner loses the
paper wallet, they can lose all of their
assets. Also, transactions using the
paper wallet is time consuming
compared to hot wallets.

As paper wallets have physical attributes,
there is no option for any technical failures.
Paper wallets are free of cost; unlike other
forms of cold wallets, users won’t have to
spend their money to store their assets.
It prevents hackers from accessing your
assets.
Advantages

These are vulnerable to any form of damage. If
it’s torn or gets faded, it can cause permanent
loss.
Creating this type of wallet is sensitive, as
malicious printing devices can expose your keys
to third parties.
After each transaction, generating a new wallet
for security reasons is a must, which
complicates the whole process.
Disadvantages

Hardware
Wallets
Hardware wallets are a type of
cold wallet that offers the highest
level of security. Here, the wallets
get rid of the issue of private key
exposure by avoiding the internet
altogether.
It’s like a flash drive where you
store your private keys. They are
easy to carry around, and you can
use them on any type of device.

These wallets can keep your private keys
secured.
These are immune to any type of computer
viruses.
Before any transaction, it will ask for
confirmation on your device, preventing any
accidents.
Advantages

This wallet will cost you money.
If stolen or lost, you can retrieve your assets;
however, you have to remember the seed
phrase to recover them.
Disadvantages

Learn More About Crypto Wallet
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