Summary

A cryptocurrency wallet is a tool for storing cryptographic keys, with various forms such as hot and cold wallets, and is integral to managing and securing digital assets.

Abstract

Cryptocurrency wallets are essential components for interacting with blockchain networks, serving as secure storage for cryptographic keys used in transactions. They come in two primary types: hot wallets, which are connected to the internet, and cold wallets, which are offline storage devices. Wallets can be integrated with Decentralized Exchanges (DEXs) and Centralized Exchanges (CEXs), offering different levels of control and security. Non-custodial wallets give users full control over their assets, while custodial wallets are managed by exchange platforms. The article also categorizes wallets into hardware, software, web, paper, and mobile types, each with its unique security features and potential risks. The author emphasizes the importance of understanding these differences and encourages continuous learning about cryptocurrency.

Opinions

The author suggests that hardware wallets provide the highest level of security for crypto assets, despite not being entirely immune to hacking.
Software wallets are convenient but are considered to be at higher risk of cybersecurity attacks due to their internet connectivity.
Web wallets are noted for their ease of access but share similar security concerns as software wallets.
Paper wallets are highlighted as a highly secure method of storing cryptographic keys, yet they are vulnerable to human error and physical damage.
The author expresses a preference for non-custodial wallets, which grant users complete autonomy over their funds, as opposed to custodial wallets managed by centralized entities.
The article contains affiliate links and referral codes, indicating the author's endorsement of certain products like TREZOR hardware wallets and the OKX cryptocurrency exchange platform.
The author reminds readers that the article is for educational purposes and not financial advice, while also disclosing the presence of affiliate links.

What is a Cryptocurrency Wallet (Blockchain)

Definition

Cryptocurrency wallet is a device or a hardware that store your cryptocurrency keys. This key are mostly used to send and receive cryptocurrency and maintain the safety of the coin.
There are two main cryptocurrency wallet which is a hot wallet and cold wallet. A hot wallet is a wallet that is connected directly to the internet and a cold wallet is a hardware or physical wallet that is not connected to the internet.
A cryptocurrency wallet can also be a part of a Decentralized Exchange (DEX) and Centralize Exchange (CEX). The main difference for the wallet that connected with this exchange are wallet that connected with DEX is a non-custodial wallet and for CEX, the wallet is a custodial wallet. Most of them also use the combination of hot and cold wallet to secure the asset inside it.
Non-custodial wallet is a wallet that is fully control by the owner of the wallet and custodial wallet is a wallet that has it private key and crypto manages by the CEX company but you still own all of the asset.
Some example for a non-custodial wallet is Metamask, Trust Wallet and WalletConnect. For a custodial wallet, it includes the built in wallet for exchange such as Kraken, Uphold and Binance.

Types of Cryptocurrency Wallet

Hardware Wallet

Hardware wallet is a physical device that store your private key and your crypto asset offline. They looks like a USB device that offer security feature such as PIN verification and 2FA authentication. This type of wallet offer the highest form of security for your crypto asset but it doesn’t mean it isn’t truly hackable.
Some of the most popular hardware wallet is Trezor, Ledger and KeepKey.

Software Wallet

Software wallet is a digital application that can be installed inside a computer or mobile device. This allow the owner of a crypto asset to directly manage their crypto asset from their own device. But, this type of wallet face a higher risk of cybersecurity attack because it was connected directly on the internet.
Some example of a software wallet is Metamask, Exodus and Eloctrum.

Web Wallet

Web wallet is a wallet that run directly inside a web browser without the requirement to install any application or software. But, it still face the same risk as a software wallet especially regarding cybersecurity attack.
Some example of web wallet is Blockchain.com, Coinbase Wallet and Binance Wallet.

Paper Wallet

Paper wallet is just a way of printing your private keys onto a piece a paper. This is the highest form of security for a crypto asset. But, human mistake is the greatest enemy for paper wallet because if you somehow misspell your private key and damage the paper, you might lose you're whole crypto asset.
Some example of paper wallet is a physical paper with a private key written onto it…obviously🤣.

Mobile Wallet

Mobile wallet is a wallet that is specifically build for mobile device such as a tablet and a phone. The application is just the same like software wallet.
Some example of mobile wallet is Trust Wallet, Exodus and BRD.

Custodial and Non-Custodial Wallet

Custodial wallet is a wallet that was manage by a CEX company but the crypto asset inside is own by you. For non-custodial asset, the wallet is fully handle by the user and owner of the wallet.
Some example of custodial wallet are Binance Wallet, Kraken and Gemini Wallet. For non-custodial wallet, the list included Metamask, Trust Wallet and Atomic Wallet.

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Affiliate Links

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(DISCLOSURE: This article contain affiliates and referral link for a certain cryptocurrency product or exchanges. This article also is not a financial advice and only for educational purpose.)