There are different types of cryptocurrency wallets that allow users to hold and access their digital currencies in different ways. The question that arises in this context is how secure these wallets are. Before embarking on the security aspect, it is helpful to understand the different types or types of cryptocurrency wallets that exist today.
Cryptocurrency wallet. Species և species
These wallets can be broadly classified into 3 categories.
- Software wallets
- hardware wallets և:
- Paper wallets
Cryptocurrency software wallets can again be divided into desktop, online և mobile wallets.
- Desktop software wallets. These wallets are designed to be downloaded and placed on desktops and laptops. This type offers the highest level of security, or their access is limited to the computer where they are installed. Moreover, if the computer is broken or infected with a virus, there is a possibility that the person may lose all his money.
- Online software wallets. This range of cryptocurrency wallets works in the Cloud. Thus, they can be easily accessed from any computer device, from any geographical location. In addition to convenience, these types of digital wallets store personal keys online. The keys are even controlled by third parties. this makes them easily vulnerable to hacking and theft.
- Mobile application wallets. Unlike the other two types, mobile wallets run on smartphones through an app. They can be easily used everywhere, including in retail stores and malls. This range of wallets is usually much simpler և smaller than a regular desktop to fit in a very limited area of mobile phones.
The difference between hardware and software wallets
Digital wallets differ from software wallets in that they hold the user’s personal keys. Hardware wallets store user keys on a hardware device (such as a USB stick). So because the keys are stored online, these wallets offer extra security. Moreover, hardware wallets are easily compatible with many online interfaces – they can work with different currencies. This variety of cryptocurrency wallets is also easy to trade. As a user, you just need to connect the device to any computer connected to the Internet, before entering the PIN, transfer the currency և just confirm the transaction. Your digital currency is stored online through hardware wallets, so the risk factor or security concern is also much less.
Paper digital wallets. This range of digital wallets is also convenient to use and provides a high level of security. The term “paper wallet” simply refers to the printing of a user’s “public” or “private” keys. However, depending on the case, it may also refer to a software application designed to create secure keys before printing.
Sweeping with paper wallets
Using paper wallets is somewhat easier. To transfer any cryptocurrency to your paper wallet, simply transfer the money from the software wallet to the public address displayed on your paper wallet. Similarly, when you want to spend or withdraw money, simply transfer funds from a paper wallet to your software wallet. This procedure is popularly called “sweeping”.
Cleaning can be done either manually by entering personal keys or scanning a QR code in a paper wallet.
How secure are cryptocurrency wallets?
Different types of digital wallets offer different levels of security. The security aspect mainly depends on two factors.
- The type of wallet you use: hardware, paper, online, desktop or mobile
- Selected service provider
Needless to say, it is much safer to keep currencies offline than online. There is simply no way to ignore security, no matter which wallet you choose. If you lose your personal keys, all the money in your wallet will be lost. On the other hand, if your wallet breaks or you transfer funds to a fraudster, it will not be possible to recover the transaction or withdraw that amount.
Investing in cryptocurrency is a smart business idea, so using an appropriate wallet is inevitable. You just have to be more discriminating with the help you render toward other people.