A cryptocurrency wallet is a device, physical medium, program or a service which stores the public and/or private keys and can be used to track ownership, receive or spend cryptocurrencies.
However there is a difference between available wallets.
Types of cryptocurrency wallets
- Paper Wallets
- Core/QT Wallets
- Hardware Wallets
- Hosted/Custodial Wallets
- Exchange Wallets
- Micro Wallets
- Browser Extension Wallets
As you see there is plenty of choice where ro receive/store your cryptocurrencies but as we pointed out at our previous article not all are safe haven for your coins.
Micro wallets are not real wallets, you can deposit and withdraw your cryptocurrencies from it but you don’t own the coins as you don’t hold the private keys of the ‘internal’ addresses. Coins deposited to micro wallets are often pooled together into one address which creates a extra security issue. If a micro wallet site is hacked all funds can be stolen from the site owner.
A hosted/custodial wallet will allow you to have a cryptocurrency address to receive/send coins but you will not hold the private keys, so the coins are again not yours till you withdraw them to a wallet you own the private keys.
These type of wallets offer also more than one cryptocurrency to store, next to Bitcoin you will be able to store a lot more different ones in the same wallet, Litecoin, Etherium, Dogecoin, and many more.
Examples of hosted/custodial wallets: Freewallet
Exchanges operate also wallets where you can deposit cryptocurrencies to, but you don’t actually own an address linked to your username at exchanges. Exchanges can be seen as Micro Wallets but with a much higher security level. But same as with micro wallets, and hosted/custodial wallets you don’t own the coins till you withdraw to your private wallet.
As the name says, it’s a wallet made out of paper , this is one of the most secure forms of storing your cryptocurrencies and the coins/tokens stored at a paper wallet address are yours. You own the private keys.
Read more about paperwallets and how to create one here.
These wallets ar physical devices that store your private key(s) in an encrypted offline environment, this is just like paper wallets one of the safest ways to story your cryptocurrencies.
Examples of hardware wallets: Keevo, Ledger, Trezor, Keepkey
Most of the crypto currency core wallets are developed using QT software framework so hence they are often named QT wallets. They are available for Windows, Linux and Mac and can be mobile or desktop based. You have full control of your coins with these wallets and you own the private keys. Often core wallets have extra functions depending on cryptocurrency type, eg PoS coins will have a stake feature at core wallets and some PoW coins hold a mint function.
A downside is of core/QT wallets that you will have to check often for updates and syncing the wallet(s) with the blockchain can take some time.
Browser Extension Wallets
As the name says these are wallets that are added as extension to your browser you can see them as a bridge without running a full node. You hold also the private keys of these wallets and are often a luxery to work with if you are a fan of dAPPs or Decentralized Exchanges (DEX), there is no need anymore to deposit to a site, because all happens directly from your wallet.
What wallet types do you use and/or prefer ? Let us know in the comments.