How to decide on which cryptowallet to choose
Cryptocurrency wallet acts as a bank account or a bag where you can put your digital currency. Unlike bank accounts, the digital currency is quite annonymous, safety of your funds is one of the key things to consider.
In order to decide which wallet to choose, consider the offers they have. The type of crypto currencies you want to purchse and sell. What are you using the wallet for? Is it a cryptowallet for bussiness or personal use.
Before looking for platforms to trade your digital currency, ensure you get a digital wallet first. The process of deciding on which cryptowallet to choose can be confusing. With offers on the market it is important to have the necessary information to make an informed decision.
Diffrent types of cryptocurrency wallets
- hot wallets
A hot wallet works from any device with an Internet connection hence reffered to as hot. It is one of the easiest wallet to use.
To get your hot wallet running, just install the software or register on the service’s website. This gives you access to an interface that aĺows you to access your currency. Some service providers give you keys for your account but some don’t.
- Paper wallets
This is the simplest wallet. Cryptocurrency account gives you public and private keys. Writing these keys down is the simplest way of storing. This is called paper wallet.
The downside of paper wallets is that it can only be used to store cryptocoins but not make payments. In order to make payments you need to create a different type of wallet and transfer your coins. Specialized software is used to enter the keys since it is confusing and tricky to enter them. This software helps to convert keys into QR codes.
Advantage of using this type of wallet is you have guaranteed security for your coins, unless your paper gets stole or damaged.
Disadvantage of using it is the wallet has limited access and inconvenient.
- Mobile and software wallets
These wallets are located locally and connected to the Internet. This wallet is a utility wallet that is accessible anywhere with internet connection. It is installed in any device to handle your keys and transactions. These wallets sre perfect for businesses or personal use to payfor services.
These wallets are in two types light or full-node. Light wallets use storage from a third party while full-node wallets use the device’s memory to store the entire blockchain. Full-node wallets cannot work on smartphone devices. This is because currently Bitcoin blockchain has storage of 200GB, a smartphone cannot handle this type of space.
Full-node wallets are more secure since they dont rely on third-party party as compared to light wallets. But when the device is compromised insecurity issues might arise.
- Cold wallets
This type of wallet is physical pieces of hardware. It resembles a flash drive and requires to be connected to a smartphone or computer device to work.
It is possible to use a USB stick, but hardware wallets are specialized based on secured elements chips. These are used to secure your keys and manage your crypto funds.
Advantages of using cold wallets old wallets can be used to make transactions and they are highly secured. But a downside to the cold wallet is specialized hardware wallets are not free you need to pay for them.