Types of Cryptocurrency Wallets: Which One is the Right Choice for Your Business
Cryptocurrency wallets are the digital wallets that are used to store cryptocurrencies. They enable easy sending and receiving of cryptocurrencies such as Bitcoin, Ethereum, Bitcoin Cash, and other cryptocurrencies. The operations in cryptocurrency wallets are based on cryptography that performs the encryption and decryption of data. For instance, “A” needs to send cryptocurrencies to “B” then “A” will transfer the crypto assets to the B’s public address in an encrypted format and “B” will be able to decrypt it by using his private key. Thus public address acts like an account number and the private key is the password to access the account. The public and private keys are always found in pairs and work in conjunction.
Moving forward, cryptocurrency wallets are different from traditional wallets. The traditional wallets are used to store, send, and receive fiat currencies whereas the crypto wallets are used to send, receive, and store crypto assets. Precisely, crypto wallets do not store crypto assets but they store the records of crypto transactions instead.
There are different types of cryptocurrency wallets — each having its own way of storing cryptocurrencies. If you are planning to create your own cryptocurrency wallet, comprehending various types of wallets will help you make the right choice for your business.
Methods of storing cryptocurrencies
Cryptocurrency wallets are broadly categorized into two types — hot wallets and cold wallets. Each of these types is further classified into other types.
Hot storage wallets are those that are always connected to the internet and are relatively easier to set up. Hot wallets are perfect for those crypto traders who indulge in regular crypto trading. The funds are easily accessible. However, since hot wallets are connected to the internet, they are vulnerable to hacking, thus they need to be fortified with multi-layer security to enable secure storage and transfer of crypto funds. The following are different types of hot wallet:
- Desktop Wallets: A desktop wallet is the one that you can download on your computer and then execute trade efficiently. A desktop wallet gives you full control over your assets and keys to enable secure transactions. These are regarded to be better than online wallets as they get installed on a single computer and all the related transactions can be accessed through this device only. You can also encrypt your desktop wallet to further enhance the security — every time a user wishes to access crypto funds stored in the wallet, he needs to insert his password.
- Web Wallets: These are most convenient to use as you can process blockchain transactions through a browser without even downloading or installing the wallet on your phone or desktop. Web wallets are best-suited for inexperienced traders and beginners as web wallets even provide the service to manage the private keys of users on their behalf, though many web wallets allow their users to manage their keys on their own.
- Mobile Wallets: Mobile wallets are considered the best software wallet as they function just like a desktop wallet but offer round-the-clock, easy accessibility to users. If you are looking to create your own cryptocurrency wallet, then a mobile wallet is the right option for you. However, since mobile wallets are connected to the internet, make sure to reinforce their security to safeguard them against any security attacks.
Cold storage wallets are the wallets that are not always connected to the internet and can be connected when a user needs to process any transaction. A cold wallet is usually considered best for those traders who wish to hold their crypto assets for a long period. Cold wallets are considered more secure than hot wallets; however, they also have threats of outside damage or theft. The following are the two main types of cold wallets:
- Hardware Wallets: These are the physical wallets that store cryptocurrencies in the offline mode. A Random Number Generator (RNG) creates public and private keys that are stored in a physical device in the offline mode.
- Paper Wallets: These are those wallets that have the private key and crypto address printed on them. Paper wallets provide the highest level of security as compared to all other wallets as they are safe from malware and hacking. However, this type of wallet is not recommended for use as it might wear out with time.
Still in doubt which crypto wallet to choose?
Schedule a free call with our subject matter experts to gain in-depth insights on:
- How you can develop a crypto wallet?
- Which type of crypto wallet is right for your business?
- Whether you should develop a multi-currency wallet or a single-currency wallet?
- How you can reinforce the security of your wallet?
Multi-signature Wallet: A multi-signature wallet, also known as a multisig wallet, requires two or more co-signers to validate a transaction. This feature enhances the security of the wallet and eliminates the problem of a single point of failure. If you choose to build a multi-currency wallet, Bitcoin wallet, or plan for ERC20 wallet development, you can leverage the multisig feature to fortify the security of your wallet.
Multi-currency Wallet: A multi-currency wallet supports multiple cryptocurrencies, enabling users to store different types of crypto funds in a single place. When building a crypto wallet, it pays off to develop a multi-currency wallet as you are more likely to get more number of users for your multi-currency wallet. This is because the users would have to invest in a single wallet to store multiple currencies.
If you are planning to create your own cryptocurrency wallet, make sure to strike a balance between convenience, security, and performance to create a great product desired by wallet users.
At Antier Solutions, we offer mission-driven wallet development services to successfully navigate your wallet development journey. We specialize in building custom wallets from scratch, based on your business needs. Besides, we offer a highly-secure, multi-currency white label crypto wallet that can be quickly launched under your brand name in just 3 weeks.
Schedule a free demo of our white label wallet or connect with our subject matter experts to share your needs for a custom wallet.