This article will discuss how to create a cryptocurrency wallet, help you decide which type of wallet suits you best, and give examples.
A cryptocurrency wallet is necessary for beginners in the cryptocurrency market or experienced traders because it is impossible to make a transaction in either direction without it.
A cryptocurrency wallet is a repository of unique codes (keys) that give the owner access to manage funds.
When you create an e-wallet for cryptocurrency, you get two unique keys:
The public key is an analog of the address for sending funds to the wallet. It is available to all network users. It is used when sending funds to your wallet.
A closed (private) key is a cryptographically encrypted password that gives access to your assets. It should be kept safe. Essentially, whoever owns this key is the holder of the cryptocurrency.
According to the presence of an Internet connection, all types of cryptocurrency wallets can be divided into cold and hot.
Cold wallets
You can purchase or create a cold wallet for cryptocurrencies if security in terms of access to coins is your number one priority. Having no direct connection to the Internet, this type of wallet is protected from viruses, hacks and hacker attacks.
Paper wallets are two keys (public and private) transferred to paper or another type of non-digital medium, recorded using cryptography. We create a cryptocurrency wallet on a computer, move it to form – and you can carry a cryptocurrency in your pocket. If the paper key is lost, access to your assets will also be lost. In this case, it is impossible to restore it – the money will be lost forever.
Hardware wallets are external media that store your keys. They are on sale in the market in a wide range. Small in size, they resemble a flash drive. A PIN code protects access to the information stored in them.
If you have a large amount, for example, bitcoins, creating a cold wallet for cryptocurrency and storing the principal funds on it will be a good solution. To make quick transactions, having a hot wallet will be more convenient.
Hot wallets
For quick access to available funds, traders prefer to have hot crypto wallets constantly connected to the Internet. Among them, several types can be distinguished.
Desktop wallets are programs for various operating systems (Windows, IOS, and others) that store keys on your computer and work when connected to the Internet. Examples of such wallets: are Exodus, Electrum, and Jaxx.
Mobile wallets are applications for a smartphone, tablet, or another mobile device. They only work if you have an internet connection.
Popular mobile wallets today: Guarda Wallet, Trust Wallet, Atomic Wallet.
Online (browser) wallets are web wallets that provide access to your cryptocurrency from any selected device that has a browser and Internet access. Examples: Matbea, Cryptopay, Coinbase.
Cryptocurrency wallets provided by various online platforms are also divided according to the principle of access to private keys into non-custodial and custodial:
Non-custodial wallets are those provided to you for use on the trading platform while keeping only your private keys to access the cryptocurrency. You are also informed of a mnemonic phrase, with the help of which you can later restore access to the available funds.
Custodial – a wallet, keys held by both the owner and the site. She is responsible for the backup and security of user funds. This option is chosen because of the ease of use – access to virtual assets is carried out using a login and password.
Recall that a hot cryptocurrency wallet is created to carry out quick transactions so that your assets are always at hand. It is also used for small expenses. And, just as we do not carry all our money in our wallets, it is also not worth keeping a large amount in a hot wallet. Hot wallets can be easy prey for crackers and hackers, so don’t put all your savings at risk.
Summary
We looked at how to purchase or create a cryptocurrency wallet and talked about different types of wallets.
According to the availability of Internet access, wallets are divided into cold (without constant access to the Internet) and hot (online).
Cold wallets are more secure but less convenient for operational use. They should keep the principal amount of funds. Types of such wallets:
Hardware – small devices that store your keys to cryptocurrency and are protected by a PIN code (Ledger, Trezor, KeepKey).
Paper – keys transferred to paper and cryptographically encrypted (can be created at www.bitaddress.org or a similar site).
Hot wallets are less secure but give you more operational freedom to make quick transactions.
Types of such wallets
Desktop – for computers (Exodus, Electrum, Jaxx)
Mobile – for smartphones (Guarda Wallet, Trust Wallet, Atomic Wallet)
Online (browser) — available from any device (Matbea, Cryptopay, Coinbase)
There are also hot wallets:
Non-custodial – in which only the user himself has access to the private key. It is possible to restore access to resources using a mnemonic phrase.
Custodial – in which the keys are stored by the organization providing the wallet. Access is via login and password.
