1. Home
  2. Docs
  3. Knowledge Base
  4. Crypto Essentials
  5. Crypto Wallets 101

Crypto Wallets 101

Storing Crypto safely is the most important first step in the new digital world of finance.

Cold Wallets

Hardware Wallets

hardware wallet is a special type of bitcoin wallet which stores the user’s private keys in a secure hardware device.

Hardware wallets are typically used to store a larger amount of crypto in a secure way.

They have major advantages over standard software wallets:

  • private keys are often stored in a protected area of a microcontroller, and cannot be transferred out of the device in plaintext
  • immune to computer viruses that steal from software wallets
  • can be used securely and interactively, private keys never need to touch potentially-vulnerable software
  • much of the time, the software is open source, allowing a user to validate the entire operation of the device

Paper Wallets

paper wallet is the name given to an obsolete and unsafe method of storing bitcoin which was popular between 2011 and 2016. It works by having a single private key and bitcoin address, usually generated by a website, being printed out onto paper.

This method has a large number of downsides and should not be used[1][2].

For storage of bitcoins, a much better way accomplish what paper wallets do is to use seed phrases instead, where the user writes down 12 or 24 random words generated by their wallet.

Read more: https://en.bitcoin.it/wiki/Paper_wallet

Hot Wallets

Hot wallets are Bitcoin wallets that run on internet-connected devices like a computer, mobile phone, or tablet. As hot wallets generate private keys on an internet-connected device, these private keys can’t be considered 100% secure.

Hot Wallets are typically used for crypto amounts needed for daily payment transactions.

Read more: https://en.bitcoin.it/wiki/Hot_wallet
Was this article helpful to you? Yes No

How can we help?

Close Menu