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