Cryptocurrency Wallets and How to Use Them

Wallets for cryptocoins are like bank accounts for money

by Marina Ovcharova
10 February • 4 min
In Tech

Once cryptocoins are bought they need to be stored. This is where cryptocurrency wallets play their role. The wallet allows users to store, receive and send tokens. Some products also enable the exchange for fiat currencies. Users can make their choice between four kinds of wallets: software wallet, web wallet or hosted wallet, hardware wallet and paper wallet. 

Software wallets are the safe choice 

This type of service requires a download of software as the naming goes. Once installed on your device, the software wallet gives you a full control over your crypto-assets and their security, which is considered as one of their advantages.

The downside is that some products, like Bitcoin Core for example, require a downloading of the whole blockchain. In storage space this is about 100GB. If the user has access to limited speed connection or his device has not much free space, this might be a reason to choose some of the other options. 

The good news is there are some software solutions that can eliminate the need of downloading all the Blockchain data. Such an example is using a software wallet client as MultiBit, in order to create a Bitcoin wallet. Another option would be the software wallet Armory but it has a little complicated setup, that can discourage some non-tech users.

Similar, as far as the security and control levels are concerned, are the wallets, that can be installed on mobile devices. Their advantage is that they are really easy to set up and run.

Offers for wallet applications for Android and iOS devices are provided by sites like MyCelium and Electrum. Copay has both desktop and mobile versions that guarantee access anytime.

It is worth mentioning that a Software wallet is as safe as the device it is installed on.

Web wallets are user-friendly

The Web or Hosted wallets are a service, provided online by a third party. Their use requires just an online registration, which takes only several minutes. Another advantage they offer is that the user can reach the stored assets by every device connected to the Internet. Well-known platforms are Blockchain and Coinbase.

The security entirely depends on the host. The choice of a Web wallet is made after a thorough and careful research and should be trusted only to committed providers.

cyber-security

Hardware wallets ensure security and mobility

Hardware wallets are another option. They are offline devices, like a USB stick, and can be connected and used to any device. Their security is provided through an offline-generated private key, that defends them against malware. On the other hand, they can be password-protected to ensure the coins' safety against a physical theft. Popular providers are TREZOR and Ledger wallet.

Paper wallets store data offline

Paper wallets are platforms that allow users to physically print-out their addresses. They are considered quite secure because they take the data offline. In addition, they are easier to use than software wallets and require no technical knowledge.

Printing out information, of course, brings another type of risk. Paper can always be damaged, lost or stolen. Users usually make sure to print out many copies and store them properly.

The coins’ addresses can be print out from platforms such as BitAddress or WalletGenerator.