• About Us
  • Jobs
  • Contact
  • Login
  • Register
Crypto Mufasa
  • General News
  • Beginner Guides
  • Bitcoin News
  • Ethereum News
  • Altcoin News
  • NFT News
  • Web Stories
  • Work With Us
No Result
View All Result
  • General News
  • Beginner Guides
  • Bitcoin News
  • Ethereum News
  • Altcoin News
  • NFT News
  • Web Stories
  • Work With Us
No Result
View All Result
Crypto Mufasa
No Result
View All Result
ADVERTISEMENT
Home Beginner Guides

What Is A Crypto Wallet And How Is It Classified?

Hania by Hania
October 13, 2022
in Beginner Guides, Crypto Wallets, General News
Reading Time: 9 mins read
A A
0
What is a crypto wallet Classification and function.
Tweet

In Brief:

    • Related articles
    • Top 5 Metaverse Tokens You Must Have In Your Portfolio
    • “India Leads The Global Crypto Adoption with 53% Of Users In 2023”
  • Cryptocurrencies and the Blockchain in brief
    • What are Crypto wallets and their Functions? 
      • Crypto Wallets, classification
        • The Cold storage and the Hot wallet

Cryptocurrency Wallets are very crucial to Crypto users as they bridge our valuable Digital Assets and the Blockchains.

Several different cryptocurrencies and wallets have emerged with the increased adoption of cryptocurrency. 

Related articles

Top 5 Metaverse Tokens You Must Have In Your Portfolio

Top 5 Metaverse Tokens You Must Have In Your Portfolio

March 21, 2023
"India Leads The Global Crypto Adoption with 53% Of Users In 2023"

“India Leads The Global Crypto Adoption with 53% Of Users In 2023”

March 21, 2023

Some defining knowledge about crypto wallets might be worth having, as they are the keys to our much valuable assets.

Cryptocurrencies and the Blockchain in brief

Cryptocurrencies are algorithmic, cryptographically encrypted codes that are stored within a wide network of computer databases called the Blockchain.

All operations of the Blockchain including transactions of funds, staking or trading are maintained by smart contracts at every end of the computers [nodes for Proof-of-Stake Blockchain, or blocks for Proof-of-Work Blockchain].

What are Crypto wallets and their Functions? 

Ownership and access to the funds in the Blockchain are maintained via Crypto wallets.

Crypto wallets do not hold cryptocurrencies. They provide users access and control over their Crypto that are stored in the Blockchain. Transactions, trading, staking, and all features are accessible only via crypto wallets.  

A crypto wallet works through a set of public and private keys. 

Account numbers are analogous to public keys. They can be freely distributed to anyone, and anyone can submit transactions to them.

Private keys, on the other hand, should be kept private. You might think of them as a type of PIN or verification code that, when combined with the associated public key, provides you access to the blockchain’s actual funds.

Under no circumstances should you ever disclose your private key(s) with anyone else. It’s best to keep them in the safest possible location (e.g. on a paper wallet or a hardware wallet).

It is possible to create public keys from private keys, but it is not possible to create private keys from public keys.

Cryptocurrency can be deposited by anyone in public addresses but only wallet holders with the corresponding keys will have access to withdraw those funds.

types of crypto wallets

Crypto Wallets, classification

Software wallets: software wallets are usually those wallets that are downloadable as apps or accessed directly through the wallet providers’ websites. For computers, they often are in the form of browser extensions. Binance, Coinbase, and Trust wallet are some of the software wallets.

Hardware wallets: Trezor, Nano, Safepal, and Secure X are some of the best hardware wallets. These types of wallets are kept offline, i.e. without being connected to the internet and a device, and function more like a USB or Smart Card. These are extremely safe. 

For any activity on the blockchain such as transferring or trading crypto, they need to be connected to the computer or the smartphone. Usually, the crypto whales and exchanges use more of these wallets to keep the keys of the huge funds safe from online phishing and malicious activities. 

Paper wallets: These are rarely used. The keys are printed on a piece of paper along with a QR [Quick Response] code which is used only a single time and partial transfer of the fund is not possible.

The Cold storage and the Hot wallet

The Hardware and Paper wallets are categorised as Cold wallets [or cold storage] whereas the Software wallets are the Hot wallets. 

The Cold wallets can be kept isolated from the users’ devices and the web. They need no internet connection or backup from the devices to hold the private keys. They work like USB devices or Smart Cards. 

Usually, the crypto exchanges, wallet providers, venture capitals, and crypto whales use more of the Cold wallets to store the keys to the bigger funds safely, as these wallets are less vulnerable to hacking and malicious attacks for being not connected to a computer or the smartphone.

The Hot wallets are the Software wallets that are downloaded as apps or browser extensions, and they can’t be kept isolated from the users’ devices. The commonly used wallets such as Binance, Coinbase, Trust Wallet, Metamask, etc are examples of Hot wallets.

Some other wallets we might be hearing about, but they are just Hot wallets with different features.

  • Multisig wallet: Wallets that require signatures from multiple users or entities, more like a joint account where a transaction needs inputs from multiple parties to be confirmed.
  • Web Wallet: These are wallets that are accessed via the web browser without any need to download or install an app. Good examples are Metamask, BitPay, and Exodus which are available as browser extensions for computers.
  • Mobile Wallet: These wallets are available as apps for smartphones. They are equipped with QR codes and code readers for easy access to public keys. Examples are Metamask, Jaxx Liberty, Trust Wallet, and Coinbase App.
  • Exchange Wallets: Wallets that are linked directly to exchanges for mostly trading purposes, such as Binance, Kucoin, and Coinbase.
  • Micro Wallets: These are wallets that send and receive even very tiny bits of cryptocurrencies.

Depending upon the centralised or decentralised nature, Custodial and Non-Custodial Wallets are two terms that we might often come across.

Custodial wallets are mostly the Exchange Wallets that keep the custody of the assets. The wallet providers hold the seed phrases. 

The owners of the cryptocurrency are not responsible for the safety of their assets although there is always the need to be careful from hackers by following routine security measures such as keeping device security up-to-date and avoiding visiting phishing sites and giving away passwords. 

Custodial wallets mostly require a KYC [Know Your Customer] verification process which requires a valid I.D. card, proof of address, etc. In case of a forgotten password or loss of a device, there is support available from the exchange to recover the account. 

These types of wallets are controlled by the exchanges and are therefore considered as centralised wallets. Coinbase is a good example of a custodial wallet.

Non-Custodial Wallets are the wallets that let users hold the seed phrases. Users are in complete control of the funds. Once seed phrases are lost, it is impossible to recover the funds. No KYC is required in these types of wallets.

Trust wallet, Firefly, Yoroi, Metamask, and all the hardware wallets are some examples of this type. These are decentralised wallets.

Based on the accessibility of Blockchains, their security, and goodwill in the market, users should choose wallets. Some wallets have selected currencies as they belong to selected Blockchains. For example, Firefly is only for IOTA and Tronlink is only for the Tronscan Blockchains. 

Some other wallets like Coinbase, Binance, Trustwallet, and Jaxx, have multiple currency storage and have access to multiple Blockchains. 

Some wallets charge more fees than others during transactions or trading. Coinbase is a good case of providing the lowest of fees. And Metamask on the other hand, although a very good and secured wallet is an example of high transaction fees.

Many wallets provide passive earning opportunities like savings and staking with APY or APR.

Considering all the factors that have been discussed, users might save up the inconvenience of registering to or downloading multiple wallets and they can as well safeguard their funds and wallet security.

Tweet47Share76ShareSendPin17ShareSend
ADVERTISEMENT
Hania

Hania

Hania is a 30-year-old blogger who used to be a teacher before entering the world of writing. She is originally from India and has been writing blogs on various topics for 2 years now. Hania is particularly interested in exploring the intersections of finance, technology, and cryptocurrency. Her experience as a teacher has given her unique insights into the ways in which digital media can be used to facilitate learning and engagement. Through her writing, Hania hopes to share her knowledge and learning of crypto industry with everyone.

Related Posts

Top 5 Metaverse Tokens You Must Have In Your Portfolio
NFT News

Top 5 Metaverse Tokens You Must Have In Your Portfolio

March 21, 2023
"India Leads The Global Crypto Adoption with 53% Of Users In 2023"
General News

“India Leads The Global Crypto Adoption with 53% Of Users In 2023”

March 21, 2023
Airdrop Scam Alert: Arbitrum Community Warns Against Fake Arbitrum Airdrops
General News

Airdrop Scam Alert: Arbitrum Community Warns Against Fake Arbitrum Airdrops

March 20, 2023
best nft wallets 2023
Crypto Wallets

Unlock the 8 Best NFT Wallets for 2023: Exceptional, Trustworthy Solutions for Safeguarding Your Digital Treasures

March 19, 2023
Crypto Airdrops: Are They Really Safe? "The Ultimate Guide"
Beginner Guides

Crypto Airdrops: Are They Really Safe? “The Ultimate Guide”

March 17, 2023
FTX Bahamas co-CEO Ryan Salame blew the whistle on FTX/Sam Bankman-Fried scandal
Business

Sam Bankman-Fried Pleas The Court To Provide His Legal Bills Reimbursement Top Priority

March 16, 2023
Euler Finance
Altcoin News

Euler Finance’s Bold Offer to Hacker: Keep $20M or Risk Prosecution

March 15, 2023
7 Profitable Ways Women Can Generate Passive Income With Cryptocurrency
Passive Earning

7 Profitable Ways Women Can Generate Passive Income With Cryptocurrency

March 15, 2023
Bitcoin Hits $28k As Unpredictability Surrounds Banks
General News

Silicon Valley Bank Collapse Might Trigger A Run On US Regional Banks

March 14, 2023
Load More
  • Trending
  • Comments
  • Latest
OKX: An all-in-one trading platform that supports cryptos, derivatives, staking, and lending

OKX: An All-in-one Trading Platform That Supports Cryptos, Derivatives, Staking, And Lending

December 27, 2022
Airdrop Scam Alert: Arbitrum Community Warns Against Fake Arbitrum Airdrops

Scam Alert: This Email Can Drain Your Crypto and NFT Wallet

January 21, 2023
Top 5 Metaverse Tokens You Must Have In Your Portfolio

Top 5 Metaverse Tokens You Must Have In Your Portfolio

March 21, 2023
HappyMiner

Earn Passive Income Cloud Mining With HappyMiner

March 19, 2023
Bitcoin ATM Rise Or Fall: In Less Than 60 Days, More Than 400 Machines Went Offline

Bitcoin ATM: How to use them?

1
All You Need To Know about Defi (Decentralized Finance)

All You Need To Know About DeFi (Decentralized Finance)

1
Robinhood enables the Web3 Wallet beta accessible to 10,000 users

Robinhood enables the Web3 Wallet beta accessible to 10,000 users

1
Mastercard Introduces a New Tool to Prevent Crypto Fraud

Mastercard Introduces a New Tool to Prevent Crypto Fraud

1
Top 5 Metaverse Tokens You Must Have In Your Portfolio

Top 5 Metaverse Tokens You Must Have In Your Portfolio

March 21, 2023
"India Leads The Global Crypto Adoption with 53% Of Users In 2023"

“India Leads The Global Crypto Adoption with 53% Of Users In 2023”

March 21, 2023
Crypto.com Will Be Laying Off 20% Of Its Workforce In 2023

Crypto.com Is One Step Closer To Obtaining An Operating License In Dubai 

March 20, 2023
Airdrop Scam Alert: Arbitrum Community Warns Against Fake Arbitrum Airdrops

Airdrop Scam Alert: Arbitrum Community Warns Against Fake Arbitrum Airdrops

March 20, 2023
Crypto Mufasa

© 2022-2023 CryptoMufasa.com
All Rights Reserved!

Navigate Site

  • Contact
  • Terms Of Service
  • Privacy Policy
  • Crypto Prices
  • Crypto Exchanges
  • Work With Us

Follow Us

No Result
View All Result
  • General News
  • Beginner Guides
  • Bitcoin News
  • Ethereum News
  • Altcoin News
  • NFT News
  • Web Stories
  • Work With Us

© 2022-2023 CryptoMufasa.com
All Rights Reserved!

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In