The world of cryptocurrency is gaining momentum every day. People who used to be skeptical about the viability of cryptocurrencies are now beginning to embrace the various forms of cryptocurrencies especially after the latest increase in the value of Bitcoin. Just like bank accounts, cryptocurrencies also have wallets where users can store their digital currencies. However, the question about different types of wallets is how secure they are. Before delving into the aspect of security, it is important to understand different types of wallets and how they function.
Cryptocurrency wallets can be classified into three broader groups, software wallets, hardware wallets and paper wallets. They can further be sub-divided into mobile, desktop and online wallets.
Online Software Wallets
This is where cryptocurrencies are stored in the cloud. This kind of storage makes it easy for users to access their money from any geographical location using any computing device. Other than the ease of access, online software wallets also store private keys online. The downside of it is that even third parties get to control the keys hence making them vulnerable to theft and hacking.
Desktop Software Wallets
These digital wallets are usually downloaded and installed on laptops and desktops PCs. The good thing about this software wallet is that it offers the highest level of security in the sense that accessibility is only limited to the computer in which the software is installed. Nonetheless, if a computer crashes or gets hacked it is likely that one will lose their money.
Mobile Software Wallets
Mobile software wallets operate differently compared to the previous two in the sense that they operate through applications run on smartphones. The advantage of these kinds of wallets is that they are easily accessible and can be used to make purchases in retails stores and malls.
What is the Difference between hardware and software wallets?
The main difference between hardware digitals wallets and software wallets is on the storage of user private keys. Hardware wallets store user keys in hardware devices such as hard drives and USBs. This implies that user keys are stored offline hence providing more security. It is also important to note that most hardware wallets are compatible with different online interfaces and thus make it possible for them to handle other forms of currencies. Besides fxtrade 777, it is also easy to carry out transactions with this form of cryptocurrency wallet. All a user needs to do is plug in a device to any computer connected to the web, enter a PIN and confirm the transaction.
Paper Digital Wallets
Digital paper wallets are user-friendly and also offer a high level of security. It’s referred to as “paper wallet” simply because of the hardcopy printout showing both the user’s private and public keys. The use of paper wallets is relatively easy compared to other digital wallets. Anyone who wants to transfer their cryptocurrency to a paper wallet only needs to transfer money from their software wallet to the public address which will be reflected by your paper display.
Are Cryptocurrency Wallets Secure enough?
The security of a cryptocurrency wallet depends on the platform it operates on. For instance hardware digital wallets appear to be more secure compared to online digital wallets. The other factor which often determines the security level of a digital wallet is the service provider.
In general, most of the cryptocurrency wallets have a tight level of security; nonetheless, it doesn’t go without saying that keeping currencies in an offline environment is safer compared to doing the same online. Anyone who deals with cryptocurrency understands that ignoring security measures is tantamount to putting your funds at risk. Once you lose your security keys, you will never be able to access your funds as well.