Demystifying Crypto Wallets
Today, let’s talk about Blockchain/Crypto Wallets! It is said to be one of the most controversial conversations recently, but this article will help you understand different types of wallets, and which one is most suitable for your needs either for Trading, Staking, Saving, Investing, Security, Access or simplicity.
Crypto Wallets are applications that are accessible to everyone and allow users to store, buy/sell, swap, stake, and control their digital assets like cryptocurrencies and nonfungible tokens (NFTs). This can be decentralized/centralized(non-custodial/custodial)! Examples of these most popular wallets are Trust Wallet, Metamask, Binance, Coinbase, Ledger Nano X, Trezor wallet et al
Before we proceed, let’s share our spotlight for this article:
Spotlighting Paper wallets which are considered a low-tech solution, it is the most hacker-proof to save your private key on a paper/physical document that is completely offline but you should ensure the document is in a dry and safe place.
Demystifying Crypto Wallets:
Wallets allow users to store, buy/sell, swap, stake, and control their digital assets like cryptocurrencies and nonfungible tokens (NFTs).
A wallet can be a mobile app, web-based/browser-based, desktop, or Physical.
Spotlighting some of the Wallets:
I spotlighted a few wallets that are being considered as people’s choices based on their features and functionalities et al, see below!
Trust Wallet is unique for its multi-chains, simplicity, several features, and millions of assets integration. Trust Wallet supports Ethereum (ETH), Solana (SOL), Binance Coin (BNB), Polygon (MATIC), Avalanche (AVAX), our own Trust Wallet Token (TWT), and 8 million more tokens! Securely import other crypto wallets like MetaMask, Coinbase Wallet, and another Trust Wallet account.
Metamask is unique for its efficient and flexible browser extension, smooth integration, and strong community user base, and as the best Ethereum blockchain wallet.
Coinbase is one of the best-known cryptocurrency exchanges in the US, with a huge market share, Coinbase is also unique with its Coinbase Exchange(Custodial) and Coinbase Wallet(Non-Custodial) having smooth integration to move funds around.
Coinbase Wallet is unique as a hot wallet that can be converted to dedicated offline storage devices such as Ledger.
Binance also provides a crypto wallet for traders to store their electronic funds. It is the largest crypto trading platform and wallet in the world and A centralised platform trusted by over 130 million users in the world.
Now let’s get to business!
Types of Cryptocurrency Wallets:
Wallets can either be Hot Wallet or Cold Wallet! Under these two umbrellas, we have the below:
- Mobile wallet (Hot Wallet) [ i.e Trust Wallet/Metamask/Coinbase]
- Web/Browser based wallet (Hot Wallet) [i.e Trust Wallet, Metamask]
- Desktop wallet (Hot Wallet) [i.e Atomic and Exodus]
- Hardware wallet (Cold Wallet/Hardware Wallet) [i.e Ledger Nano X, Trezor wallet]
- Physical media (Cold Wallet/Paper Wallet) [i.e Apha Numeric/Barcode]
Hot Wallet Crypto:
A hot wallet refers to a virtual/digital currency wallet that is accessible online with the help of the internet and facilitates cryptocurrency transactions between the owner and other users. A combination of seed phrases/private keys stored on a program connected to the internet and used to store and send different currencies such as Bitcoin, Ethereum et al.
Hot wallets, on the other hand, may either be custodial or non-custodial.
Hot Wallet as Custodial:
A hot wallet is any wallet that is connected somehow to the Internet. For example, when you create an account on Binance and send funds to your wallets, you are depositing into Binance’s hot wallet.
Hot Wallet as Non-Custodial:
Trust Wallet is known as a hot wallet, which means the keys to your digital assets are in your custody but on a device that connects to the internet.
The private keys are held in custodial wallets on behalf of the owner of the wallet.
Finally, Web, Mobile and Desktop wallets can be classified as hot wallets that are connected to the internet. Though Desktop Wallets are considered more secure than web-based and mobile wallets!
Cold Wallet
Cold Wallets are hardware wallets, which are considered the most secure wallets. They are physical devices that look like a much bigger USB key. It is a distinct device that keeps your crypto offline when you want another layer of security. They often have biometric locks and are known to be the most secure way of storing any amount of crypto. When sending or receiving cryptocurrency, you need to connect the hardware wallet to your computer and run software to move the currency.
A cold wallet (also called cold storage) is not connected to the internet, therefore, it holds far less risk of being compromised, covering secured assets against physical loss, damage, theft, and internal collusion.
It is a non-custodial wallet, where the owner is the only one that has the private keys that give access to the wallet’s funds. Also called a “hardware wallet” and “offline wallet,”
in 2021, Binance Launched a custodian platform with its own cold-storage solutions. It’s a decentralized trading platform that allows you to have total control of their private keys, while also being able to trade directly from their cold storage devices (hardware wallets).
The two most popular types of COLD wallets are Hardware and Paper, others are physical bitcoins, or a secondary offline computer used to store cryptocurrency.
PAPER WALLETS:
Paper wallet which is spotlighted in this article is considered a low-tech solution, It is the most hacker-proof to save your private key on a paper/physical document that is completely offline.
A physical printout, containing your private and public keys, which can be used to carry out crypto transactions smoothly. The printed paper can be in alphanumeric strings of characters, and Quick Response (QR) codes that are randomly generated using a key generator.
These can be printed as QR codes so you can quickly scan them into a hot wallet to make a transaction. Once in a paper document form, you must safely store the document in a dry and safe place.
HARDWARE WALLET
Hardware wallets often contain sophisticated high-tech components. Both are considered highly secure ways of securing your crypto.
Note that Ledger wallets are the same as hardware wallets made by Ledger Company.
Examples of Ledger/Hardware Wallet are Ledger Nano X, Ledger Nano S, Trezor wallet, and ELLIPAL Titan Bundle! The private keys never leave the device!
Thank you!
