What are bitcoin wallets?
Just like every currency, your cryptocurrency requires a wallet too. Just like every other wallet, it stores your funds keeping them secure. The difference between a digital wallet and a regular wallet is that it is not a physical wallet but provides other additional benefits. The program of a bitcoin wallet is built to store bitcoins and handle the exchange of the currency among investors. The owner of the wallet can send or receive bitcoins to either purchase or sell their cryptocurrency. You will find several types of bitcoin wallet can cater to the needs of individual investors based on their preferences. We will discuss the top 4 types of wallets in length. You will learn more about these bitcoin wallets below.
The 4 main types of bitcoin wallets are web, desktop, mobile and hardware wallets
- Web Wallets:
- Online wallets are also called web wallets. To access this type of wallet you need to have an internet connection and stay connected as long as you want to manage your currency. The website is run and monitored by a third party that supervises every transaction running online by users of the wallet. A security key or access codes are required to log in to the e-wallet. This key needs to remain private but if the website crashes or a hacker gets into the system and discovers the security keys, the wallet holder will be helpless against them and all their currency will be lost. Some websites also have the feature to access e-wallets through devices such as mobile phones, computers or tablets if it is connected to the internet.
- But web wallets can be very vulnerable in terms of security and there is a high risk of theft or the website going down in which case the owner will lose all their coins.
- Desktop Wallets:
A desktop wallet can be downloaded and installed on the desktop giving complete control of the wallet to the owner. The private access keys are stored in a hard drive that keeps it safe. This makes them more protected as compared to web wallets since there is no third party involved in the management of your currency or mobile wallets. With desktop wallets, the users don’t have to fret over their coins being stolen by hackers because the private keys of the individual are stored away in a separate hard drive. But in an unfortunate circumstance if this hard drive is lost, then there is no way to gain back the funds. Creating a backup and keeping it locked up is always advised with desktop wallets. This type of wallet is greatly effective in selling, purchasing and exchanging bitcoins in a small quantity. They are also easy to manage, reliable and user-friendly. Different kinds of desktop wallets are available for the Windows operating system or Mac OS and Linux as well.
- Mobile Wallets:
Mobile wallets run similarly to desktop wallets. The application can be quickly installed on mobile phones so that the wallet is with the user everywhere they go. Mobile wallets make access to cryptocurrency stress-free and simple. Some applications also have the feature to scan QR codes and manage the bitcoins with just a simple tap of the fingers. Near-field communication is another feature that allows the user to log in with the tap on the terminal without having to enter the information first.
Many different applications of mobile wallets are available for iOS and Android users. This type of wallets is very useful for people who have to deal with big money rush , or running purchase and selling transactions daily because mobile wallets store the private access keys and enable the user to directly enter.
Although mobile wallets are highly popular among bitcoin users, they are the most easily hackable platform after web wallets. Hackers don’t have to face a lot of trouble to steal the private keys and the content of the wallet. Another disadvantage of mobile wallets is that if the person loses their mobile, they automatically lose their bitcoins as well.
- Hardware wallets:
The safest and defended type of wallet is the hardware wallet. All information and the private access keys are stores in an external hardware drive such as a USB. The user connects the USB to a computer that is operating on a secure server and runs their transaction without a worry. There can be no hackers or virus attacking, neither can a third party steal the coins. The only drawback to hardware wallets is that they come with a hefty cost.