In our last newsletter, we explained that crypto wallets work the way your bank account does. Today, we’ll explore some key features and types of crypto wallets popularly used to store cryptocurrencies.
Every crypto wallet has a public and private key
The public key is the wallet address which we said is similar to your bank account number. It is linked to a private key (more on this in a bit) and allows you to receive transactions from other wallets. Just like your bank account number, you can freely share your public key without worrying about the safety of your crypto.
The private key is the code that gives you access to the crypto stored in your wallet. It’s like the secret login details to your bank account or the password/pin with which you approve transactions. Of course, no one else must know these details, and you must never lose them.
A private key can take many forms, including:
- Mnemonic keyphrase: A mnemonic keyphrase is a bunch of 12 to 24 random words that you select when creating a wallet.
- QR Code: Most of us are familiar with QR codes when purchasing items from the supermarket. You can also generate your crypto wallet private key as a QR code that can be saved or printed out.
- 64-digit hexadecimal code: Some crypto wallets generate private keys in the form of a 64 digit hexadecimal code that is a combination of letters and numbers.
- 256 character binary code: It’s not uncommon for private keys to take the form of a 256-character binary code consisting of numbers.
Types of Crypto Wallets
Crypto wallets come in different forms, and are classified into two categories:
- Software wallets
- Hardware wallets
Software Wallets
Software wallets are also known as “hot wallets” since they are usually connected to the Internet. Under this category, we have:
Desktop wallets: These are crypto wallet applications that you install on computers and laptops. Some examples are Electrum and Exodus wallets.
Web wallets: These wallets give you access to funds via a browser. Many crypto exchanges offer web wallets as an option to store cryptocurrencies. Some popular web wallets include Blockchain wallet and Coinbase.
Mobile wallets: These are wallets that work for mobile devices. They are the most popular crypto wallets and are easy to use. Some examples include Trust Wallet, Coinbase, and Atomic Wallet.
Hardware Wallets
Hardware wallets are electronic devices that store cryptocurrencies. They can be carried about and provide a safer but expensive option for users. They use a random number generator (RNG) feature to create private and public keys.
Key features
- Hardware wallets are not connected to the internet and can be accessed offline.
- They are more complex to use compared to software wallets
- You can add extra security features like pin and recovery phrases to hardware wallets
Some popular hardware wallets include Trezor wallet and Ledger wallet.
