There are four distinct categories of cryptocurrency wallets: paper, hardware, cloud, and online. Let’s have a look at each of them.
Paper wallets are generally classified as cold storage. The term “paper wallet” generally refers to a physical copy or paper print of your public and private keys. Other times it means software used to generate a pair of keys along with digital file for printing. Whichever the case, paper wallets can grant you a relatively high level of security. You can import your paper wallet into a software client or simply scan its QR code to move your funds.
If a paper wallet is available for cryptocurrency of your choice, you’re likely to find a guide on how to make one on the project’s website or community page. MyEtherWallet is a universal way to make a paper wallet for Ethereum and all ERC-20 tokens. Use Bitcoin Paper Wallet Generator to generate a paper wallet for Bitcoin.
Although paper wallets are cold, they come with their share of risks, too. For instance, paper wallets can be easily damaged, burned, easy to copy and take pictures, and require mutual trust if you’re not making one yourself. To make paper wallets less fragile, sometimes people laminate them, create multiple copies and store them in different locations, engrave them on pieces of metal or other sturdy materials, etc.
Note, that it is a bad idea to keep electronic copies of your paper wallet on your PC. The private key of paper wallet should always be kept offline. Keeping your paper wallet files online makes it as secure as a hot wallet.
Online wallets, by definition, are hot. Using a cloud wallet, your funds can be accessed from any computer, device, or location. They are super convenient, but they store your private keys online and can be controlled by third-parties. Therefore, they are more vulnerable to attacks and theft by design. Popular cloud wallets include:
Software wallets are downloaded and installed on a personal computer or smartphone. They are hot wallets. Both desktop and mobile wallets offer a high level of security; however, they cannot protect you against hacks and viruses, so you should try your best to stay malware free. As a rule, mobile wallets are way smaller and simpler than desktop wallets, but you can easily manage your funds using both of them. Besides, some software wallets allow you to access funds via multiple devices simultaneously, including smartphones, laptops, and even hardware wallets.
- Electrum Wallet
- Infino Wallet
Unlike software wallets, hardware wallets store your private keys on an external device like USB. They are entirely cold and secure. Also, they are capable of making online payments, too. Some hardware wallets are compatible with web interfaces and support multiple currencies. They are designed to make transactions easy and convenient, so all you need to do is plug it in any online device, unlock your wallet, send currency, and confirm a transaction. Hardware wallets are considered the safest means of storing crypto assets. The only drawback is that they aren’t free to use.
Popular hardware wallets include devices by:
Getting a hardware wallet directly from a manufacturer is the most secure way. It is unsafe to buy it from other people, especially the ones you don’t know. Mind that even if you get a hardware wallet from a producer, you should always initialize and reset it yourself.