A crypto wallet is used to interact with a blockchain network.
In reality, crypto wallets don’t store the currency but act as a tool of interaction with blockchain, i.e., generating the necessary information to receive and send money via blockchain transactions.
How do crypto wallets work?
Crypto wallet uses public and private key cryptography to give you access to your cryptoassets.
The public key enables others to send cryptoassets to you, while the private key gives you the ownership to spend it. All these mechanisms happen in the background, and the only thing you need to ensure is the safety of seed words, which you get while setting up your crypto wallet for the first time.
- Private keys – Wallets where you control your private keys
- Ease of use – Elegant UI for ease of use
- Development community – Active development community
- Backup & security – Backup and restore features
- Compatibility – Compatible with different operating systems
- NFT support: Let you buy,selll and see your NFT’s
Hot wallets are connected to the Internet and thus are less secure and pose more risks but are user friendly.
They are more likely to be used for daily transactions since :
- They are easy to set up
- The funds are quickly accessible.
- Traders conveniently use them.
They are are stored offline and don’t require internet connectivity thus they have improved security and less risk. They are used for more long-term holdings hence are suitable for HODLers.
Types of wallets
- Paper Wallets
- Hardware Wallets
- Web Wallets
- Mobile Wallets
- Desktop Wallets
Paper wallets are printed out on paper and now are unreliable and obsolete.
These are hardware devices built specifically for handling private keys and public addresses. They are often referred to as cold storage. Examples of such devices are:
Web wallets are hot wallets that are always connected to the internet and can be accessed via different internet browsers. A simple example of the web wallet is storing cryptocurrencies on a crypto exchange. The most important thing you need to know here is, you don’t have access to your crypto wallet’s private key.
Web wallets are sometimes hosted wallets (no access to private key) and sometimes non-hosted (control over private key/seed word) too, depending on what type of wallet you are using. However, we always recommend using “non-hosted wallets” so that you always control your funds.
Some non-hosted wallets:
Some hosted wallets:
Mobile wallets for Bitcoin and altcoins are the most used wallets because of their easy accessibility. For popular cryptocurrencies, you will find mobile wallets compatible with both Android and iOS. They are Hot wallets.
Some mobile wallet suggestions:_
- Trust Wallet
- Phantom wallet (Solana)
- Terra station wallet (Luna ecosystem) Android version | iOS version
- xDefi wallet
Desktop wallets for Bitcoins and cryptocurrencies are installable software packs that are available for most desktop operating systems such as Mac, Windows, and Linux. These wallets are cold wallets.
A custodial crypto wallet is one where your assets are held in custody for you.
This means a third party will hold and manage your private keys on your behalf. In other words, you won't have full control over your funds - nor the ability to sign transactions.
A non-custodial crypto wallet is a wallet where only the holder possesses and controls the private keys.
For users who want full control over their funds, non-custodial wallets are the best option. Since there are no intermediaries, you can trade crypto directly from your wallets.
It's a good option for experienced traders and investors, who know how to manage and protect their private keys and seed phrases.
Examples of decentralized exchanges that require a non-custodial wallets are:
Non-custodial wallet providers
Note :With these wallets, you are fully responsible for keeping your seed phrase and private keys safe.