The purpose of wallets is to be able to keep the type of cryptocurrency that you want. There are even portfolios designed specifically to support the cryptocurrency that you want to have. Some wallets offer the possibility of holding several types of cryptocurrencies at the same time, while others can only store one type of coin. The different types of wallets come with different levels of security and access, so there are options for people who want the best type of security and for people who want to have access to their cryptocurrencies wherever and whenever they want. There are four types of relevant wallets on the market:
Web Wallets
This is the type of wallet most used by new users and for people who trade with cryptocurrency. Web wallets are commonly offered by the cryptocurrency exchange websites, where you can save all the different cryptocurrency that you have bought and transfer or sell quickly. The reason why it is the most used is that they are user-friendly and it is also easy to buy and sell different cryptocurrency on these sites, making it quick and simple for new users to start in the cryptocurrency world. The risk of this type of wallet is that if the website disappears or is hacked, most likely your cryptocurrencies cannot be recovered. Even if the website declares on bankrupt, you could lose all of your coins. One of Bitcoin’s most used web wallet for new users is BitGo, which only works as a Bitcoin wallet. Jaxx has a similar wallet to Bitgo, with the only difference that it can store another type of coins beside bitcoin and it can also be installed as an extension of your web browser. Coinbase offers wallets for Bitcoins, Ethereum and Litecoin, and also offers the opportunity to buy and sell cryptocurrency with your own money. Finally, Bittrex, which is an exchange website that offers a great variety of cryptocurrencies, offers more types of cryptocurrencies than Coinbase.
Software Wallets
It is another type of wallet but for users more experienced in cryptocurrencies because it provides a complete control on the cryptocurrency. This means that no one else can have access to your balance or wallet. However, it also means that if you get hacked or the computer is stolen, you are very likely to lose all your coins, unless you have a backup of the entire database of the wallet, ensuring that if someone tries to hack the wallet, it is possible to make a backup and recover the funds. The ideal example for this type of wallets is Bitcoin Core, which was designed to have total control of your Bitcoins on your own computer. This wallet can hold up to 40 GB because it contains all of the information from the network transactions.
Mobile Wallets
It is mainly used to hold a small part of cryptocurrencies like Bitcoin and Litecoin on your mobile device, which can be used to transfer to other users or to pay online in any store that takes this type of cryptocurrency as a payment method. With more and more stores integrating coins as a worldwide payment method, it may be a good idea to keep a small part of the coins to pay for something. Eventually, it is planned to be a substitute for cash. An example of a mobile wallet is Copay, which stores bitcoins in your Mobile device.
Hardware Wallets
Is one of the most secure and preferred wallets by experienced users to store any cryptocurrency that you may have. This type of wallet allows you to store cryptocurrencies in a secure unit very similar to a pendrive. This king of wallets are highly resistant to computer viruses and the unit must be connected to a computer in order to access the wallet. This type of wallet is not necessary unless you have a large amount of capital invested in cryptocurrencies for saving. One of the most popular hardware wallets regarding product and price is Trezor, which also offers a wallet backup in the cloud, security code of “12 phrases” for recovery and a pin code to access and make transactions. If you lose the wallet device, you can buy a new one and recover the funds using the “12 phrase” security code and download your information from the cloud.
And remember, the most secure way to keep safe your cryptocurrency is through the methods that you can control yourself and are not dependable on any other company or person.
