Cryptocurrency Wallets: Types of Crypto Wallets and Best Crypto Wallets
Cryptocurrency wallet is an important asset which allows users to store and retrieve your cryptocurrency. This article will introduce what cryptocurrency wallets are and the types of crypto wallets in the market.
What is a cryptocurrency wallet? Is it safer to use a cryptocurrency wallet?
A cryptocurrency wallet is a digital wallet that allows you to store and retrieve your cryptocurrency assets. If you purchase cryptocurrency through cryptocurrency exchange, the crypto that you purchase will only be stored on the platform. In case the brokers go busted, you are unlikely to be compensated for your loss as crypto trading is not regulated in Hong Kong. Therefore, a growing number of investors would rather own his or her own wallet for safety and accessibility sake. It is only by keeping your own private keys can it give you access to your cryptocurrencies, which is suitable for long-term investors.
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Types of cryptocurrency wallet
Though there are 3 main types of crypto wallets, including paper wallets, hardware wallets and online wallets, they generally fall into two main categories: hot and cold wallets.
Hot wallet
Hot wallet (known as software wallet) is a form of digital storage that investors can access on their digital devices, and is connected to the internet.
Cold wallet
A cold wallet, also known as a hardware wallet or cold storage, is a physical device that keeps your cryptocurrency completely offline. Many look like USB drives. Because it doesn’t have an internet connection, cold wallets are more secure than their hot wallet.
Things you should know before getting a crypto wallet
Keys are written on a physical medium like paper for paper wallets - which makes it difficult to keep. Therefore, it is least recommended among all crypto wallets. However, if you lose your key, you end up losing all access to your crypto.
FAQ
What is a crypto wallet?
- For investors who would like to have a more secure option, they can purchase a cryptocurrency wallet. They generally fall under two main types: hot and cold wallets. Crypto wallets keep your private keys which give you access to your cryptocurrencies.
What is the difference between a cold wallet and a hot wallet?
- The major difference is that a hot wallet is connected to the internet while a cold wallet is not. Keys are stored in a USB like device for cold wallet that will only be connected to a computer when you would like to use your crypto.