What are some of the types of cryptocurrency wallets?
While simply purchasing cryptocurrencies like Bitcoin, Ethereum, Cardano, and others is a task in itself, storing them is just as important. You need to consider ease of use, security, portability, and what coins a wallet will support.
Here are some of the top types of cryptocurrency wallets:
Exchanges: We mention this first to get it out of the way. Exchanges are not wallets, and are not as secure. They should not be treated as replacements for wallets. While some exchanges are better than others and provide security measures like two-factor authentication, it is very unwise to store your crypto in an exchange. Don’t fall for the ease of use or convenience of storing crypto in exchanges.
Hard storage: Likely the least convenient option for storing Bitcoin (and other) private keys, it may be the most secure. With this method you usually print a QR code which contains everything needed to generate the private keys to access your cryptocurrencies. Big downside is that it would take longer to draw out your crypto in case of a big event. You might also lose the document.
Cold storage/hardware storage: These are highly secure, mobile, and likely the most secure wallet to store crypto like Bitcoin. They are often used as a “backup” method. Your private keys will be stored on a device with strong encryption and password enforcement. Ledger and Trezor are both very viable options.
Desktop wallets: Desktop wallets like Electrum or Exodus offer a lot of functionality and are easier to use and install than a hard storage, hardware storage, or cold storage. They are also quite secure and very reliable. Be sure to look which cryptocurrencies these wallets support.
Online wallets: While online wallets like Blockchain.info, Darkwallet, and Bread Wallet are definitely a step up from storing in exchanges, they offer many of the same risks. You will need to give more trust to the platforms to provide security and reliability. Many online wallets suffer from outages during periods of high transactions. However, they are easy to use and very convenient.
Many wallet providers will offer every type of wallets and backup options. When trying to determine the best cryptocurrency wallet, it’s always best to look at security history & features, price, coins supported, and if there are multiple options available.