WHAT IS CRYPTOCURRENCY WALLETS?
Cryptocurrency wallets are pieces of software that connect to blockchain networks in order to securely access, transmit, and retrieve cryptocurrency funds or properties. Simply placed, the app encrypts and stores your cryptocurrency in the same way as conventional wallets encrypt and hold your cash and credit cards. The storage system is where things get complicated. In contrast to fiat money aka USD, CAD, and so on which is deposited in a vault, crypto assets are stored on the blockchain. Much like you might use a debit card to withdraw cash from an ATM. The cryptocurrency wallet does not store physical items.
Cryptocurrency wallets may take the form of hardware, software, or mobile apps that agree to access the ledger's transaction history records. Simply placed, if you would like to use your cryptocurrency, you'll need a wallet.、
CUSTODIAL VERSION Vs NON-CUSTODIAL
When it comes to holding the cryptocurrency, there are two types of wallets available known as custodial and non-custodial.
Wallets For Custodial Use
Many people begin their cryptocurrency journeys on centralized exchanges. These are online exchanges that enable you to purchase, sell, and store a range of cryptocurrencies. Many of you are probably familiar with Coinbase, amongst most common centralized exchanges in U. S and an excellent choice for beginners. Exchanges such as Coinbase are referred to as "custodians" since they hold the cryptocurrency in trust.
Custodial wallets have an easy route to enter the crypto community. It's as easy as creating a Coinbase account with your email address, checking your identification with a photo ID, creating a secure password, and connecting your credit card and bank account as well to begin purchasing.
Wallets That Are Not Custodial
A non-custodial wallet is your easiest and safest option if you want complete leverage of your crypto money. There is no third-party involvement in these wallets, and your private keys retain ownership. While this is optimal for defense, it entails a large business deal of liability.
Assume you already have a Coinbase account but desire complete power of your crypto. The good news is that you can now move your cryptocurrency holdings from Coinbase to a non-custodial wallet of your choosing. This is particularly beneficial for all of you planning to store vast quantities of cryptocurrency or those interested in purchasing NFTs.
TYPES OF CRYPTOCURRENCY WALLETS
Bear in mind that there are many different types of cryptocurrency wallets. Let us examine each possibility.
Software Wallets Extremely Safe Storage
Software wallets are classified as "hot storage," a phrase that refers to every wallet that has been connected to internet directly. Software wallets are further classified into three types: online, tablet, and desktop.
Wallets On The Internet
For example, the MetaMask Chrome extension and Mycrypto.com
Online wallets can be accessed through browser extensions or websites which are compatible with the majority of computers that have internet access. MetaMask is a fantastic web plugin that is widely supported for all web applications. Although this makes them incredibly convenient, it often makes them susceptible to cyber threats.
For example, MetaMask Mobile, Rainbow, and Argent
Smartphone applications are used to open mobile wallets. Due to the ease of which these wallets can be downloaded directly to your phone or handheld computer, they are ideal for daily, on-the-go access and transactions. As with your device, keep your phone charged and secure at all times.
Wallets For Desktop Computer
For example, Mycrypto client-side
Downloadable desktop wallets software apps and mounted directly on your personal computer or laptop. Private keys are entered into this program and never exit the computer that downloaded them.
Although apps or hot wallets are handy, they are recommended for holding only limited quantities of cryptocurrency due to the possibility of hackers or viruses.
STORAGE IN THE COLD
By contrast, "cold storage" wallets securely store the keys in a spot that is not wired to the internet, ensuring increased security and privacy.
Wallets with Hardware
For example, Ledger, Trezor
Hardware wallets, amongst most of security alternatives, are physical devices that allow you to conduct transactions without revealing your seed phrase or private keys to the internet. Usually, hardware wallets resemble a USB or thumb drive which you bind your device or laptop during a transaction and then detach until complete. Due to the fact that you’re private keys are located on the system itself, rather than on a server or an internet network, hardware wallets are hacking is incredibly difficult
Wallets Made Of Paper
Paper wallets are essentially a way to hold the account's private key and public key pair on a sheet of paper. They may be useful for storing crypto keys that don’t want to access for an extended period of time, but are usually considered redundant in favor of seed phrases.