Things To Know Before Creating A Cryptocurrency Wallet
If you haven’t already started thinking about owning your own cryptocurrency, then I’m guessing you still don’t understand what cryptocurrencies are. You should check out my guide to understanding cryptocurrencies. However, if you have, then you are like my friend who is interested in owning some cryptocurrencies but doesn’t know where to start from. If this is you, you can rest easy, because this post is for you.
What is a Cryptocurrency Wallet?
First off, a cryptocurrency wallet is a digital wallet that holds the private key that allows you to access your bitcoin address so that you can be able to monitor your balance, send money and conduct other transactions.
There are different types of cryptocurrency wallets and I will explain each of them.
- Online wallet
- Desktop wallet
- Mobile wallet
- Hardware wallet
- Paper wallet
Desktop Wallets: Desktop cryptocurrency wallets work when they are downloaded and installed on the desktop. Desktop wallets give users full control over their keys because they offer a high level of security, and the wallet is only available on the PC that it was installed on. However, the downside is that it might get hacked if exposed to outsiders or infected by a virus and you may lose all of your assets.
Online Wallets: Online cryptocurrency wallets are wallets that run on the cloud and are accessible to anybody at any given time from any location. Online wallets are easier for anyone to use, and at the same time, open to spammers and hacking attacks because they are controlled by a third party and the private keys are stored online.
Mobile Wallets: Mobile cryptocurrency wallets are wallets that run on mobile phones. The software application just needs to be downloaded on your phone and you can start using it. It’s smaller, handy, and easier than the desktop wallet because of the limited space that is available on mobile phones.
Hardware Wallet: Hardware cryptocurrency wallet is different from software wallet because it stores user’s private keys on a hardware device like the USB. Hardware wallets are also called offline wallets because they are stored offline, and this, unlike the online wallets provides an extra layer of security because they are not vulnerable to hacking attacks. When a user wants to make a transaction with a hardware wallet, all they need to do is plug in their device to any internet enabled device, enter their pin, and confirm they’re sending currency. Hardware wallets make it easier to keep cryptocurrency assets safe from danger.
Paper Wallet: Paper cryptocurerncy wallet has unarguably been declared the best bitcoin wallet for 2018 because they are easy to use and provide a very high level of security. The term, ‘paper wallet’ is a document that contains all the information you need to generate the private keys that you need. Transferring cryptocurrency to your paper wallet is made possible by transferring funds from your software wallet to the public address that is displayed on your paper wallet. And if you want to spend or withdraw funds, all you have to do is enter the QR code on your paper wallet or by entering your private keys.
What to think of when choosing a cryptocurrency wallet
How do you know which cryptocurrency wallet to go for when there are a lot of options to choose from? The answer is yours. It depends on your intention with the wallet.
- Are you an investor who wants to just purchase cryptocurrencies and hodl on to it or are you simply psyched with the idea of digital currencies and making daily purchases with it?
- Will you need access to your digital assets from home or from anywhere?
Give some thought to these questions and in the next post I will be sharing different wallets in the blockchain and a step by step guide to creating a cryptocurrency wallet.
*I love feedback, please write one for me in the comment section. I’d love to read your thoughts**