What are the Different Types of Bitcoin Wallets?

Bitcoin is the digital currency that is taking the world by storm. Today, many are accepting bitcoins. However, the bitcoins you purchase must be stored safely.

The safest and secure place for you to keep your valuable coins is the bitcoin wallets. There are different types of bitcoin wallets available in the digital world. You must choose the one that is safer for you to buy.

Different Types Of Crypto Wallets

There are two types of wallets: the hot wallet and the other is the cold wallet. The difference between them is whether they are connected to the internet to store the thenewsspy digital currency. Hot wallets are less secure as you must connect to the internet. It poses a serious security threat. However, it is user-friendly.

The cold wallet is used as cold storage to keep the cryptocurrencies. The digital currency would be stored offline to boost security. These are like the fiat currency you carry in the wallet to carry out daily transactions.

The hot wallet can be used for day to day transactions. On the other hand, a cold wallet would be used to store bitcoins. These are for savings.

Wallets are divided into five types and have a different level of security for each one. Now, let us take a close look at each wallet and its pros and cons.

1] Online wallet

You can access the online wallet through the web browser. The online wallets can be called as hot wallets. The wallet can be on the mobile or on the desktop.

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However, it is recommended not to keep all the bitcoins in one place and in one wallet to avoid security threats. The online wallets are highly attractive to the attackers, and these are almost like honey pots to them.

Pros

• Quick to complete the transaction.
• Best to keep small amounts.
• Manage different types of digital currencies in one wallet.
• Offer privacy.

Cons

• Prone to phishing and other security vulnerabilities.
• Coin details are kept on the third-party server.

2] Mobile wallets

You can store the bitcoins on the mobile wallet. This gives access to the bitcoins as long as your mobile is with you. It runs with the help of the internet and is also prone to many security threats.

Pros

• Easy to use and send payments in a matter of seconds unlike other payment options.
• Scan QR code and make payments through bitcoins.
• Offer privacy.

Cons

• Insecure devices and additional encryption are required.
• The phone is prone to virus or key loggers.

3] Desktop wallet

The desktop wallet is known to be a little secured compared to the online and mobile wallets. However, if you are getting connected to the internet, it is prone to security threats. If you are using a laptop to store the bitcoins offline, it is considered cold storage and highly secure. You can use the old laptop to store bitcoins.

Pros

• Simple to use.
• If you are not connecting to the internet, then it is highly safe.
• Private keys are not kept on the server.
• Offer privacy.

Cons

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• When connected to the internet, it is prone to security threats.
• If you are giving computer for repair, the technicians may steal the coins.
• If you fail to back up the bitcoins while formatting, you lose them.
• People can steal the coins through key loggers.

4] Hardware wallet

This is not so user-friendly when compared to the online wallet, mobile wallet, and desktop wallet. However, these are highly secure compared to the hot wallets and simple to use compared to the paper-based wallet.

You must need to keep on changing the battery to run these wallets. It looks like a flash drive on which you can store the digital coins. You can store a lot of cryptocurrencies on this wallet. You do not have to take this often, whenever you need some, you can transfer to the online wallet and start using it.

Pros

• Secure way to store bitcoins.
• Stronger security.
• Cons.
• Challenging for the beginners to learn and use.

5] Paper wallet

It is a cold wallet where the bitcoins would be in the form of paper. As long as the paper is secure, your bitcoins are safe in your hands.

Pros

• Hacker proof wallet.
• Do not need to store on any third-party server or computer.
• Private keys are with you.

Cons

• Put a lot of efforts to move the cryptocurrencies.
• Must have technical knowledge.