You cannot undermine the vitality of access to your cryptocurrencies. A way of storing your cryptocurrencies for easy access is by creating wallets. Crypto wallets are devices or mediums that store public and private keys for crypto transactions. They may be online(hot) or offline (cold).
Both Hot and cold wallets have downsides and upsides. Meanwhile, hot and cold wallets are not the only storage medium for cryptocurrencies. Thankfully this article discusses media you can store your cryptocurrencies.
However, we cannot discuss how to store cryptocurrencies without mentioning the different crypto wallets. So here are the other crypto wallets and how they store cryptocurrency efficiently.
The custodial wallet is the most common type of wallet as brokers own it. For this reason, they're the default storage option for brokerage accounts.
A custodial wallet involves a third party, the stockbroker, or any medium to hold your cryptocurrencies for you. Custodial wallets are not compulsory, and you can transfer your cryptocurrency from them to another wallet. However, not all brokers allow funds to be transferred outside the custodial wallet.
Advantages
● Custodial wallet grants users unlimited access to their coins, provided they can access their accounts.
● A custodial wallet requires the least work on your(user's) part.
A cold wallet is an offline cryptocurrency storage medium, and it can be a free paper wallet or hardware wallet. However, hardware wallets are the most common type of cold wallets.
Hardware wallet devices can be connected to a computer to grant users access to their cryptocurrency. In addition, they can be connected to the internet to send cryptocurrencies, but they store your funds offline.
Advantages
● It is the highest level of wallet security.
● They have recovery phrases.
Hot wallets are online cryptocurrency storage devices that can only be accessed via the internet. They may be web-based, desktop-based, and can be mobile applications.
Unlike cold wallets, hot wallets can be hacked – although the chances are low, it doesn't still eliminate the chances of being hacked. On the other hand, hot wallets have recovery phrases you can use to regain access if you ever lose a hot wallet.
Finally, you're given total control of your cryptocurrency in hot wallets, and you don't invite a third party.
Advantages
● They're mostly free
● They're easy to use
Physical crypto wallets are also known as paper wallets. Paper wallets are printouts containing public and private keys, which can either exist as scannable QR codes or characters. The private keys and public keys function differently but are necessary for transactions in a paper wallet.
You use the public keys when you want to receive cryptocurrencies; you scan the private and public keys to send cryptocurrencies.
Just like hardware wallets, paper wallets are not easy to hack. But unlike hardware wallets, they're not user-friendly.
Advantages
● They're free to create
● They offer the best possible security at the lowest price.
● Store your crypto in cold wallets
● Store smaller amounted crypto in hot wallets
● Physically store your recovery phrases in case you lose access to your funds.
● Do not share your recovery phrases with anyone.
Crypto wallets are efficient ways of storing your cryptocurrency. This article discusses the crypto wallets together with their upside as cryptocurrency storage.