• Block¢hain Wa𝕝𝕝ets | Types

    There are two main classes of wallets: hardware and software wallets. Another major subdivision is online and offline wallets. (Blockchain Login)

     

    Online wallets are also called hot wallets and are used while online or connected to the Internet. They include web wallets. Offline wallets are used to store private keys offline and used to sign transactions without requiring to be connected to the internet. They include all hardware wallets and paper wallets.

     

    Another classification is deterministic and non-deterministic wallets depending on the relationship or non-existing relationship of the public and private keys.

     

    However, wallets can be subdivided into types according to the platform onto which they can be stored and used. We also have various types of blockchain wallets based on the technology they use.

     

    #1) Non-deterministic Wallets

    These types are those in which private keys generated on the wallet are not related. Although the wallet allows for generating more than a single private key, the keys are not related to each other for instance to share a common recovery phrase or seed, which creates some management headaches. Backing up each of the keys is crucial, which creates trouble for management as you create more keys.

     

    #2) Deterministic Wallets

    These are those whose private keys generated on the wallet are all related to each other back to a recovery seed (24-words long recovery phrase). All a user needs to do is to back up the wallet with the seed and the seed can be used to recover all the private keys. Most modern wallets are deterministic.

    Deterministic wallets apply a single hash function to the seed to generate all the private keys. The seed is used to recover the wallet with all the addresses and thus private keys contained therein.

    Hierarchical Deterministic wallets have sub-wallets in them which are related through a child and grand-children relationship. To enable this kind of relationship among the wallets and sub-wallets, these types of wallets support the BIP-32 format.

    This kind of HD wallet can be helpful in an organizational setting where a company would want to allocate keys to its different departments and branches to help track expenses.

    #3) Hardware Wallets

    These are hardware devices that are used to store and manage private keys and public addresses, as well as sign transactions.

    • Most hardware wallets are USB-like devices that have an OLED screen and are used to observe activities being carried out. The side buttons are used to sign transactions and navigate through the interface like scrolling through and selecting features you want to run.
    • These devices are small like the size of a finger and they do connect to P.C. and other portable devices via USB. They come with native desktop apps for different cryptocurrencies. They synch with these apps.
    • Hardware wallets cost around $70-$150 but at that cost, they are considered the safest types of crypto wallets. That’s because they keep the keys offline. Examples include Trezor and Ledger which allow you to store more than 22 cryptocurrencies including BTC plus over 500 ERC-20 tokens.
    • Hardware wallets are most suitable for a large organization holding or handling a lot of value in cryptocurrencies.

    #4) Paper Wallets

    Crypto owner needs to keep their private keys safe. A good alternative is to print the keys on a piece of paper, which can then be stored in a safe place and referred to later when spending your cryptocurrencies.

    These are some of the safest methods of securing cryptocurrencies although a paper can easily spoil or be accessed by a third party if not secured properly. Not all cryptocurrencies offer paper wallet options.

    • Using a paper wallet is recommended most when storing your Bitcoins or other cryptos for a very long period.
    • The process of creating a paper wallet depends on the cryptocurrency in question. They can be created offline. For instance, to create a Bitcoin paper wallet, all you need is to download and save bitaddress.org, open the webpage while disconnected from the Internet, then hover the mouse over the page to create a 100 percent degree of randomness. Clicking on the paper wallet option on this page will create a paper wallet of single or more wallet addresses and their private keys. Print this file and keep the main portion securely and safely. You can then use these addresses to store Bitcoin knowing that you have their private keys secure and safe with you.
    • A paper wallet can have an extra layer of security where it is secured with a passphrase to unlock it.

    #5) Desktop Wallets

    Coinomi desktop wallet:

    Desktop wallets are a type of software installed and used on major P.C.-based operating systems such as Windows, Mac, and Linux. Almost every other cryptocurrency will start by launching a desktop-based wallet. Desktop wallets also include web browser extensions and plugins installed on the browsers.

    These include MetaMask Ether wallet and Jaxx’s Chrome Extension.

    They are not the most secure options because your desktop or laptop will connect to the Internet and their security can be compromised online if used without following stringent internet security measures. These measures include using up-to-date antivirus programs, anti-malware, and strong firewall procedures.

    All in all, software that connects to the internet will require extra security and protection measures.

    Types of desktop wallets include Exodus, Bitcoin Core, and Electrum.

     

    #6) Mobile Wallets

    Mobile wallets are installed as phone applications on Android, iOS apps, or other portable devices. To an extent, extensions and plugin wallets that work with browsers can be classified as mobile as long as they can work with these devices.

    They enable using of crypto on the go but are not the most secure wallets because the devices are always connecting to the internet. Some allow users to save private keys offline on the device.

    Examples of mobile wallet software include Mycelium, Coinomi, and Electrum.

     

    #7) Web Wallets

    Web wallets are a type of hot wallet always connected to the Internet. These are the applications that run on browsers by way of a user opening the website wallet address and logging in to the Internet. As such, they can be accessed via Google Chrome, Firefox, and Internet Explorer.

    These wallets store private keys on the Internet in servers where these apps run, mostly in the cloud although some do allow users to store keys offline. For instance, non-hosted wallets such as MyEtherWallet and MetaMask do not store keys on servers and allow users to download and store them offline. Hosted wallets include Coinbase and CEX.io.

     

    #8) Single or Multi-currency Wallets

    Single currency wallets store a single cryptocurrency while multi-currency wallets store multiple cryptocurrencies. Multicurrency wallets simplify the work of anyone dealing with multiple crypto types for he or she will not need to install a wallet for each. These can be hardware, web, mobile wallets, or extensions/plugins.