We use a wallet to store cryptocurrencies, with the help of which we can send and receive crypto.
In other words, the crypto wallet is like your physical wallet and is used, to connect to the given blockchain. You don’t actually store money in the wallets, only information that you can use to generate the data, which is needed to use your cryptocurrencies. These tools keep the information for sending and receiving your cryptocurrencies between the user and the blockchain network.
Crypto wallets can be grouped in two ways. One way to compare is whether are they connected to the Internet or not. Accordingly, we are talking about hot or online and cold or offline wallets.
Hot wallets are that crypto wallets, where the private key is stored on a device that has an internet connection. These are less secure than cold wallets, but they are very convenient for frequent use. Hot wallets can be classified as desktop wallets, mobile wallets and for example exchange wallets.
Unlike hot wallets, cold wallets are not connected to the internet. In other words, the private key(s) of the given wallet is stored on a device, which is not connected to the internet. Examples of such devices are Ledger and paper-based wallets.
According to the other comparison method, we can talk about software, hardware, or paper-based wallets. The software wallets are the most common ones – in this case, we access our cryptocurrencies using a software.
Hardware wallets are physical wallets, we physically have them, for example Ledger, which is like a pendrive and we can store our cryptocurrency on it offline.
Paper wallets are actually printed QR codes, with the help of which we reach our wallets.
In summary, if you want to keep your crypto safe in the long term, choose one of the cold wallets, and if you use your currencies often, then the hot wallets are right for you. Whichever solution you choose, make sure you never give your private key to others.
If you have a question about crypto wallets or crypto mining, book an appointment for a personal or online consultation.
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