5 Types of Cryptocurrency Wallets and Their Pros and Cons

A digital currency wallet is a software program that stores your digital assets. More specifically, it holds the public and private keys that can be used to send and receive cryptocurrencies or make payments using digital currencies. In fact, without digital wallets, there would be no digital currencies! Here, we introduce several different types of digital currency wallets, starting with the least secure wallets.

Pros and Cons of Different Types of Cryptocurrency Wallets

You may have used a digital wallet, also known as an e-wallet, through your mobile phone. Personally, I use wallet apps for train tickets, parking tickets, and Apple Pay. The latter is Apple Inc.'s mobile payment and digital wallet service, for example, allowing users to make payments in person in iOS apps. Compared to these wallets, a cryptocurrency wallet is a completely different thing.

Here are five of the most popular cryptocurrency wallets, sorted by security level.

Online Wallet

These are arguably among the least secure cryptocurrency wallets. However, it is convenient to use them for small amounts of cryptocurrency. Online wallets, also known as web wallets, allow access to cryptocurrencies through an external network. Therefore, as long as you are connected to the internet, you can store your digital currency and make crypto payments. Online wallet providers store the private keys of your cryptocurrency on their servers. The online wallet service website may send you a password, they will save your keys, and enable you to access them. Different services offer various features, some of which are linked to multiple devices, such as mobile phones, iPads, and PCs, via an internet connection.

The advantages of online wallets include:

• Fast transactions

• Ability to manage multiple cryptocurrencies simultaneously

• Convenient and active trading anytime, anywhere

Disadvantages include:

• Online security risks such as hacking and scams

• Risks to personal protection, such as computer viruses

• A third party stores your private keys

Mobile Wallet

Mobile wallets can be used on mobile phones through apps. Just like Apple Pay, as cryptocurrency becomes more popular, mobile wallets can be used when shopping in physical stores. Other types of wallets, such as online wallets, also offer mobile versions. But some wallets are designed specifically for mobile phones.

Some advantages of mobile wallets include:

• More secure than online wallets

• Easy to carry

• Provides additional features such as QR code scanning

Some disadvantages of mobile wallets include:

• If your phone is lost or damaged, you may lose your crypto assets

• Risks of Mobile Viruses and Malware

PC full node wallet

This is another option that is more secure than online wallets. You can download a desktop wallet and install it on your PC. Desktop wallets are especially safe if your PC is never connected to the internet. If your PC is never connected to the internet, it effectively becomes an offline cold wallet.

Some advantages of desktop wallets include:

• This is a convenient option for those who trade cryptocurrencies via computer

• Your private keys are not stored on third-party servers

• If your computer is never connected to an external network, it is probably perfectly safe.

Some disadvantages of desktop wallets include:

• Difficulty using crypto assets while traveling

• If connected to the internet, it becomes a hot wallet with a lower security

• If you don't back up your computer and it crashes, you may lose your key

Hardware wallets

This type is arguably one of the most secure cryptocurrency wallets currently available. They store your private keys on devices such as USB drives and can perform online transactions. However, since they are offline most of the time, they can be considered cold wallets.

Some advantages of hardware wallets include:

• One of the most secure crypto wallet options

• Great for storing large amounts of cryptocurrency that you don’t want to use every day

Some disadvantages of hardware wallets include:

• Most Expensive Type of Wallet

• Not particularly beginner friendly so not very user friendly but an absolute must for a large amount of cryptocurrencies

Paper Wallet

Super cold offline wallet. To use, you just need to print out the private and public keys. Funds can be sent by transferring money to the wallet's public address, and you can withdraw or send currency by entering the private key or scanning the QR code on the paper wallet.

Some advantages of paper wallets include:

• Super hacker-proof

• No private keys stored on your computer or phone

• Private keys are not stored on third-party servers

Some disadvantages of paper wallets include:

• Not friendly to non-geek users

• Difficult to use for daily transactions

• They will catch fire and flood