Did you know that the global blockchain market will go up to $23.3 billion by the year 2023? As more people find value in cryptocurrency, they are considering more ways to invest and trade.
But, how can your store cryptocurrency for protection? There are different types of cryptocurrency wallets made for this reason.
Read on to learn more.
Types of Cryptocurrency Wallets
Although there are different types of cryptocurrency wallets, the two main types are hot wallets and cold wallets. Hot wallets, in some way, are connected to the internet while cold wallets are physical and not connected to the internet.
Hot wallets allow users more flexibility when compared to cold wallets. The best crypto wallet is one that is digital so that you can access your funds at all times. Yet, there are some vulnerability issues with these wallets.
Cold wallets aren’t connected to the internet which is why users find them more secure. To some, this is the best cryptocurrency wallet. The one you choose depends on what benefits matter to you most.
For your funds to get lost with a cold wallet, you would have to lose your wallet or have it stolen. The security you have with a cold wallet comes with a downside as well. These wallets make it harder to trade funds.
Those that are heavily dependent on the cryptocurrency market and own a lot of funds might opt to use both a hot and cold wallet. Within these two categories, there are paper wallets, software wallets, and hardware wallets.
A paper wallet is a type of cold wallet because it is literally a piece of paper. This document has the information and data necessary to access your cryptocurrency funds.
Even though cold wallets tend to offer more security, a paper wallet is more vulnerable than other types. If you lose your paper wallet, your funds are lost.
To send funds with a paper wallet is time-consuming. Not many who invest in cryptocurrency choose this form of wallet.
Most software wallets are hot wallets because they connect to the internet. The most common software wallets include the following:
- Web wallets
- Desktop wallets
- Mobile wallets
Web wallets can be accessed through a web browser. You must download specialized software made by a cryptocurrency business to get into your wallet.
Desktop wallets require an application download to your computer. Mobile wallets work similarly.
A hardware wallet works like a flash drive as the funds are saved on a physical device and not in software. Although hardware wallets are not connected to the internet, you can connect them to your computer or another device.
If you lose this device, you can access your funds again using a seed phrase.
How Will You Protect Your Funds?
Cryptocurrency funds are stored differently than regular monetary funds. The only way to keep your data safe is by using one of the many types of cryptocurrency wallets.
Now that you know a little bit about each of them, you can make the right choice for your needs. Decide which pros and cons you can have peace of mind with to keep your funds safe.
For more financing guides, check out the other posts on our blog.