Crypto wallets tend to fall under two main categories: hardware wallets and software wallets.
Software wallets are just browser extensions or desktop programs that make it very simple for people to receive, send and store cryptos. Hardware crypto wallets serve almost the same purpose but these happen to be physical devices that you can plug into a computer.
Software crypto wallets are at times referred to as “hot” wallets since all of your funds are held online. Hardware crypto wallets keep your private keys in ‘cold’ storage or offline. If you would like to learn more about these two types of crypto wallets, you have come to the right place.
Keep reading to gain more understanding of software crypto wallets and hardware crypto wallets.
Software Crypto Wallets
Putting it in layman terms so you can understand this concept easily, a software crypto wallet is a special computerized program or mobile application that accommodates private keys online. Software crypto wallets happen to be unique to each crypto while hardware crypto wallets often support a number of different currencies.
You can use software crypto wallets either on the web, in this particular case they are called custody wallets, that are not fully safe and secure. Alternately, these software crypto wallets come in the form of applications that can be installed on your laptop or smartphone. In this case, the private keys are held on your local device. These might be linked to the net again which makes them less safe and more vulnerable.
A quick tip for you if you are considering using a software crypto wallet is that when you use software wallets, ensure that you create backups on a frequent basis. If an issue surfaces with your hard drive or web browser, you can very easily lose the private keys to your crypto wallet, and that can result in in permanent loss of your funds which obviously would be a big setback for you!
Software Crypto Wallets Main Types
There happen to be 3 primary types of software crypto wallets which are:
- Desktop crypto wallets, like the Electrum wallet that you can easily use of a laptop system of your desktop computer.
- Web-based crypto wallets such as MetaMask, that function as a browser extensions and have the ability to send over ETH transactions. This makes it simple for crypto users around the world to interact with things such as decentralized apps and protocols of decentralized finance.
- Mobile crypto wallets like the Blockchain wallet, which enable crypto users to hold various crypto, receive or send transactions, and transfer private keys of a current crypto wallet into the application by scanning a certain QR code on their mobile phone device.
A hardware crypto wallet is a small-sized device that can hold crypto offline. A hardware wallet can keep your keys off of your computer or smartphone. Most of the time, you plug in the hardware crypto wallet from any USB port. An important thing to know about this is that it is more secure and safe this way owing to all of the signings that take place off of your computer.
The typical hardware crypto wallet will set you back by around 100 dollars approximately. Keep in mind that hardware crypto wallets have a tendency to be more complex to use when compared to software wallets.
Most of the hardware wallets engage with a computer in 1 of 3 ways:
- A company-created application
- A web-based interface
- A separate software crypto wallet
A crucial thing to know is that every type of crypto wallet has its own usage contingent on the goals of the crypto user, though they all achieve the same things. It is vital that you look into both the software and hardware crypto wallets carefully and understand the pros and cons of each of them before you decide which one to go for to hold your funds depending on your particular use.