By Lumai Mubanga. [email protected]
There are many forms of crypto wallets but basically, they are categorized into two groups as either hot or cold.
Hot wallets are online based but the difference lies in the method of access.
Some examples of hot wallets are smartphone apps such as Mycelium and AirBitz. These are types of wallets that offer a lot of flexibility especially when you consider accessibility issues.
Online Web Wallets
There are also a good number of online wallets such as those hosted by blockchain.info and coinbase.com. These are easily accessed through browsers on different computer platforms and operating systems.
Whether these are cloud based or not depends on the platform that offer them. For example, coinbase is the easiest to use but your private keys are held up in the clouds and you never get to see it.
Cold Wallets – Cold Storage
On the other hand, there are what are known as Cold wallets. These never touch the Internet and are also in use today. The categories are paper wallets, hardware wallets and brain wallets.
These are literally pieces of paper with your private key printed on it. Paper wallets are more preferred to online wallets because of security concerns.
The website bitcoinpaperwallet.com allows users to generate fancy paper wallets. For security reasons, these websites will ask you to download the entire website and run it locally from your computer. This though is done after shutting off your entire Internet connection for maximum security.
However, printing of these papers also calls for additional security procedures that need to be adhered to strictly to safeguard the process.
Examples of hardware wallets are Ledger, Trezor, Case and Keep Key. They are simply little devices that plug into your laptop, computer or smartphone through a USB and sign transactions for you. The idea behind this is that, while your computer is connected to the Internet, the hardware wallet handles all your transactions and private key in a trusted environment running separate from your computer and never touching the Internet.
All these above types of wallet above are prone to security risks. Online web wallets may be hacked, smartphone or hardware wallets may get stolen and your house may catch fire and you lose your paper wallet.
Imagine a wallet that will be immune to all these calamities. That’s the Brain wallet! How does it operate? Well, can you trust your brain to keep your private key securely? Yes, simply memorize your private key with your brain. Brain wallets are a mnemonic, or collection of words and phrases.
Ultimately, you have the responsibility to choose the right Wallet for yourself.