Types of Bitcoin Wallets
Introduction to Crypto Wallets: Crypto wallets are software programs or physical devices that store, send, and receive digital currencies. They come in various forms, each with its own unique characteristics, advantages, and disadvantages. The main types of crypto wallets can be broadly categorized based on their method of storage, internet connectivity, and level of security.
- Hardware Wallets: These are physical devices that store private keys offline, providing maximum security. Examples include Ledger and Trezor, which use physical devices to keep keys offline.
- Software Wallets: These are digital programs that store private keys online, making them more accessible but also more vulnerable to hacking. They can be further divided into desktop, web, and mobile wallets.
- Paper Wallets: These are physical documents that contain public and private keys, used for storing cryptocurrencies offline. They are considered cold wallets and are more secure than hot wallets.
- Custodial Wallets: These wallets require users to safeguard their own private keys, while self-custody wallets entrust that security to a third-party, usually a crypto exchange.
- Hot Wallets: These wallets are connected to the internet, making them more accessible but also more vulnerable to hacking. Examples include web and mobile wallets.
- Cold Wallets: These wallets are stored offline and don’t require internet connectivity, making them more secure. Examples include hardware and paper wallets.
- Multi-Signature Wallets: These wallets require multiple signatures to authorize transactions, making them more secure for shared accounts.
- Non-Custodial Wallets: These wallets give users full control over their private keys, allowing them to manage their funds without relying on a third-party.