A cryptocurrency wallet is just like any other normal wallet where instead of Fiat currency you store digital currencies such as Bitcoin, Ethereum, and more. It incorporates a public key and a private key. The private key is used to access public Bitcoin address and sign the transactions. The combination of sender’s private key and receiver’s public key is responsible for executing a Bitcoin transaction.
There are different types of wallets in the market and each has its own advantages and disadvantages. If you are looking to develop a wallet for yourself, understanding the different types of wallets will help you find the one that best meets your needs.
- Paper Wallet
A paper Wallet is a document that contains a public address which is used to receive Bitcoins and a private key that is used to transfer Bitcoins stored at a public address. Paper wallets are often printed in the form of a QR code which can be easily scanned.
One of the advantages of a paper wallet is that it is completely immune to hacking, malware and any form of digital theft since paper wallets are not stored digitally anywhere. However, there are certain precautions that need to be taken. When you are generating a paper wallet, make sure no one is watching you. Use a clean operating system in order to avoid risk of any spyware monitoring your activities.
Once the wallet is setup the code should be able to run offline so that you can disconnect from internet before generating the keys.
Make sure to use a printer that is not connected to a network. Keeping the printed document safe is another important thing to do. Get it laminated or keep it safe in a deposit box.
- Mobile Wallet
Mobile wallets are a good option for those who use Bitcoins on a regular basis to pay for goods or trading. It is an app on a smart phone that stores private keys and allows payments for goods or services directly from the phone.
Some mobile wallet apps come with Near Field Communication (NFC) support that allows you to simply tap their smart phone against the reader without the need to manually provide any information.
- Web Wallet
In web wallets, private keys are stored on a server of a company providing bitcoin wallet app development services. The server is online and is monitored by some other authority.
Like mobile wallets, https://youtu.be/Pfh614AYA3oweb wallets enable you to access your funds anywhere from any device that is connected to the internet. However, if the implementation process of a web wallet is wrong, the organization that hosts the website for you gets the overall control and might steal your funds.
- Desktop Wallet
Desktop wallets are installed on a computer and their private keys are stored on the hard drive. Desktop wallets are more secure as compared to online and mobile wallets because these wallets do not depend on third party for data. It becomes hard to steal funds. However, as they are still connected to the internet, therefore some amount of insecurity remains. These wallets are best suited for people who do small Bitcoin transactions from their computers.
- Hardware Wallet
A hardware wallet stores a user’s private keys in a secure hardware device. It is the most secure option to store as many Bitcoins as you can.
Unlike paper wallets that need to be imported to software at some point, hardware wallets allow secure and interactive use. Furthermore, hardware wallets provide protection against computer virus. The funds stored on a hardware device cannot be transferred out of the device in plain text.
To sum up, different types of wallet cater different needs. Analyze your business needs, understand the pros and cons of each wallet type and then choose the right wallet for your business.