If you’re new to cryptocurrencies, then you may be unfamiliar with cryptocurrency wallets.
However, in order to buy and trade any cryptocurrencies, you need to understand different types of
wallets and how they work.
All crypto wallets have their own specificities, advantages, and
disadvantages and it would be wise to know what these are before you even think about investing.
Here’s a rundown of different wallet types, along with their pros and cons.
First, let’s start with online wallets. Online wallets are a form of a hot wallet, meaning that they are
connected to the internet at all times. They’re also the easiest type of crypto wallets to use. But they
aren’t without their disadvantages.
For one, your private key, which is essential for anybody to access their coins, will always be stored
on another server. Second, they can be prone to glitches and are not as safe as offline wallets. And
at the end of the day, the company hosting your coins has complete control over your coins and
could shut down or limit access at any time.
However, if you go with a reputable online wallet, you don’t really have to worry about these issues.
And they’re often tied to reputable exchanges who have to maintain a solid reputation. If you’re an
Australian citizen and are unsure about where to buy and store your coins, you can check this
tutorial on buying cryptocurrency in Australia
Software wallets also fall under the hot wallet category. However, they require you to download a
piece of software on a connected device. They are slightly safer than online wallets, but they aren’t
without their faults as well. For one, they can be hacked by a third party. And if you happen to lose
the particular device the wallet is installed on, you will lose access to your cryptocurrency as well.
However, there are some wallets that offer a backup option in case of a loss.
Hardware wallets, contrary to software or online wallets, are cold wallets, meaning that they give
you the option to store your coins offline. These are by far the safest and hardest to hack wallets out
there since they hardly have to be connected.
However, these also are much more expensive than
other options and can be lost as well. But, there is virtually no risk of your coins being blocked,
stolen, or your device being targeted by malware with hardware wallets.
Yes, believe or not, you can store cryptos using nothing but a piece of paper. A paper wallet is pretty
much a piece of paper with your private and public key printed on it. Paper wallets are the ultimate
form of cold storage and are actually safer against attacks than online and software wallets.
However, you still have to worry about the possibility of losing your wallet and access to your coins.
Now that you know the differences between different wallets, it’s time to look around and find one
that works for you. Make sure that you pick one with the perfect balance of safety and convenience
if you want the buying, storage, and trading process to be as smooth and safe as possible.