Intro to Wallet Types
Remember a crypto wallet is an app that you use to interact with the blockchain network that keeps track of your crypto transactions. Crypto wallets are organized into three main types: software wallets, hardware wallets, and paper wallets.
Software wallets are the most common and are further organized into three types: web, mobile and desktop. Wallets are also often described by their security features. They are either hot wallets or cold wallets. Hot being the least secure because it’s always connected to the internet and cold being the most secure because it is not connected to internet. I’ve added a third security category called the warm wallet. See the charts below for more info.
|Exchange||Hot||No control over public/private keys; keys stored on exchange server|
|Web||Hot||Always connected to internet, no control over public/private keys; keys stored on server|
|Mobile||Hot/Warm||Mostly connected to the internet, seed phrases protect private keys; keys stored locally|
|Desktop||Warm||Sometimes connected to the internet, seed phrases protect private keys, keys stored locally; can be accessed/backed up|
|Hardware wallets||Cold||Not connected to the internet except during a transaction. Keys are encrypted and stored in hardware wallet|
|Paper wallets||Cold||Never connected to the internet. Private key dangerously visible on the paper|
In the following chapters we will explore many wallets available on the market today that fit into these three wallet types. We’ll start with the least secure hot wallets and end with the most secure cold wallets.