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Types of Wallets

Today we will look at the different types of wallets available. In one of my previous posts I mentioned Jaxx and blockchain as wallets. These are types of wallets that fall into one of two categories of wallets. One thing we have to keep in mind as we begin is that a wallet is simply the place where your private key is stored. Let's get into it.

A wallet can therefore be anything from an app on a mobile phone, a USB drive or a website. It can also be a piece of paper or even your brain...I'll explain. Wallets can further be segregated into hot wallets and cold storage wallets.

 Hot Wallet

 A hot wallet is any wallet which is connected in some way to the internet. This can be a wallet that is connected to a web service, a wallet installed on a computer connected to the internet or even a wallert installed on your phone. Although they are the most popular nowadays, they are the least secure because they are susceptible to malware attacks via the internet.

Types of hot wallets

 1. Web wallets. These are wallets hosted on a website. These are the least secure because you do not have control over the private key. If you do not control your private key then your assets are in the hands of someone else.

2. Desktop wallet. These wallets store your private key on your computer. So for as long as your computer is free of malware then your assets are safe. However, this is never the case as computers can never be 100% protected.

3. Mobile Wallets. Mobile wallets store your private key on your mobile phone. I advise that you do not store substantial amounts of assets on your mobile wallet. If you do then ensure that you activate 2FA security feature to enhance safety of your assets.

Cold Storage Wallets

 The term 'Cold storage wallet' refers to any wallet which is not connected to the internet. They are the most secure form of wallets available and thus are recommended for storing large amounts of assets. Some examples of cold storage wallets are hardware (HD) wallets, paper wallets and brain wallets.

Types of cold storage wallets

 1. Hardware (HD) wallets. These are physical devices which safely store your private key such that it cannot be hacked even if your device was compromised. They are portable and convenient for storage, sending and receiving transactions. some popular HD wallets include TREZOR, Ledger Nano S and KeepKey

Source: www.hardware-wallets.net


2. Paper wallets. This is simply a piece of paper with your private key written or printed on it. In order to generate a paper wallet you can use websites such as bitaddress.org or walletgenerator.net. Most sites will also allow you to generate a brain wallet as well.

Source: www.walletgenerator.net

3. Brain wallet. This is a way to create a private key out of a predetermined text or set of words. Instead of getting a randomly generated seed you decide for yourself on a paraphrase.

Here marks the end of my discussion on crypto-currency wallets. In my next post or the one after next I will feature a write up from a friend of mine. He will talk a little about security insofar as trading and storing crypto-assets is concerned. However, without pre-empting him I want to mention two very important security practices:

1. Never share your private key with anyone, unless of course you want them to have access to your assets. This is more like sharing the PIN for your ATM card.

2. Avoid the Number 1 newbie mistake and never keep your assets in an exchange wallet. As soon as you make your desired profits move your assets or funds to a secure wallet for storage. In fact, as a habit of good practice you should have both a hot wallet and a cold storage wallet. Keep a small amount of assets in your hot wallet for purchasing stuff and then keep the majority in the cold wallet.

Thank you for taking time to read my post. If you have questions, comments or suggestions please drop a comment. Til next time, peace, love and harmony.

References:
www.coinoutletatm.com
www.99bitcoins.com
www.medium.com

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