There are different types of cryptocurrency wallets that allow users to store and access their digital currencies in different ways. The question that is relevant in this context is how safe these purses are. Before we get into the security aspect, it is useful to understand the different types or types of cryptocurrency wallets available today.
Cryptocurrency wallet: types and types
These wallets can be broadly divided into 3 categories:
- Software wallets
- Equipment purses and
- Paper wallets
Cryptocurrency software wallets can be re-divided into desktop, online and mobile wallets.
- Desktop application wallets: These wallets are designed to download and install on desktop computers and laptops. This variety offers the highest level of security, although their accessibility is limited only by the computer on which they are installed. In addition, if a computer is hacked or infected with a virus, a person is likely to lose all his money.
- Online software wallets: This variety of cryptocurrency wallets works in the Cloud. Thus, they can be easily accessed from any computing device and from any geographical location. In addition to ease of access, this type of digital wallet stores private keys online. The keys are even managed by third parties; this makes them easily susceptible to hacking and theft.
- Mobile application wallets: Unlike the other two types, mobile app wallets work on smartphones through one app. They can be easily used anywhere, including retail stores and shopping malls. This range of wallets is usually simpler and smaller than conventional desktops to take up very limited space on mobile phones.
The difference between hardware and software wallets
Hardware digital wallets differ from software in terms of storing the user’s private keys. Hardware wallets store user keys on a hardware device (such as USB). Thus, since the keys are stored offline, these wallets offer additional security. In addition, hardware wallets are easily compatible with many online interfaces and can handle different currencies. It is also easy to make transactions with different cryptocurrency wallets. As a user, just enter the PIN code, connect the device to any computer connected to the Internet, transfer the currency and simply confirm the transaction. Your digital currency is stored offline by hardware wallets, so there is less risk factor or security concern.
Paper digital wallets: This range of digital wallets is also user-friendly and provides a high level of security. The term “paper wallet” simply refers to the paper printing of both public and private keys of the user. However, given the circumstances, it may also refer to software designed to securely generate keys before printing.
Sweep with paper purses
Paper wallets are relatively easy to use. To transfer any cryptocurrency to your paper wallet, transfer funds from the application wallet to the general address specified by your paper wallet. Similarly, when you want to spend or withdraw money, simply transfer funds from a paper wallet to your software wallet. This procedure is called “sweeping” among the people.
Sweeping can be done manually by entering private keys or by scanning the QR code in a paper wallet.
How reliable are cryptocurrency wallets?
Different types of digital wallets offer different levels of security. The security aspect mainly depends on two factors:
- The type of wallet you use – hardware, paper, online, desktop or mobile
- Selected service provider
Needless to say, it is safer to keep currencies offline than online. Regardless of the wallet you choose, there is no way to ignore security measures. If you lose your private keys, all the money kept in your wallet will be lost. On the other hand, if your wallet is broken or you transfer money to a scammer, it will not be possible to refund the transaction or get the money back.
Investing in cryptocurrency is a smart business idea, and using a suitable wallet is inevitable. You just have to be a little more careful to ensure the safety and security aspect of your fund transfers and transactions.