A cryptocurrency wallet is a digital wallet which is used to store, send and receive crypto coins. In fact, in order to use cryptocurrencies, you need to have a cryptocurrency wallet. Most of the crypto coins have their own official wallet or third-party wallets. In actuality, none of these wallets actually store the crypto coins, but they store the private and public keys which are digital codes that are connected to your currency.
There are several digital currency wallets in the market today. They are mainly hardware, software and paper wallet. The wallet you choose depend on your needs, type of coins, the nature of transaction and many other features.
What is Hardware Wallet?
A hardware wallet is just like a USB drive than can be connected to any device having an USB port. It is a physical electronic device wallet. All your private keys are securely stored here in the hardware wallet. Hardware wallets are never connected to the internet and stores your private keys securely in the device in an offline mode. It is in fact one of the best wallets to store your bitcoins due to its security features and protection against malware and viruses. Since it an offline wallet, it is very difficult for hackers to steal your wallet and it can be further protected by the use of a secure PIN code. Hardware wallets have physical buttons, LED screen, a backup recovery feature as well. The interface is also quite simple even for new and non-technical users. The hardware wallet screens provide extra security to the device. Read: Best Hardware Wallets
One of the best examples of hardware wallet is Ledger Nano S. it is in fact one of the cheapest hardware wallets and costs about $95 only. It is very easy to set up. It comes in a sealed box with holographic sticker. There is an instruction card, a recover card, a USB lead, a keychain and a lanyard. Users are instructed to write down the 24-word recover phrase. Trezor is another hardware wallet which is very small and actually the size of your thumb. It stores multiple currencies like Litecoin and Ethereum and costs around $99 approximately.
What is Paper Wallet?
Paper wallet as the name suggests is a piece of paper your cryptocurrency address, private keys and a QR code. They are cold storage wallets and are not connected to the internet and are extremely safe. There is less chance of hacking and infiltration by malware or software viruses. However, the setting up of paper wallet is somewhat confusing and depends entirely on the user how he manages his wallet. Users need to be extremely cautious regarding the storage of paper wallets as there is no backup system. You have to connect your paper wallet to a PC or device for transfer of assets. But you need to be extra careful so that there is no malware infiltration while it is connected to internet. Users should keep in mind that while using paper wallet, your printer does not have an internal storage or else it is susceptible to malware. Users are also advised to remain up-to-date with recent security features of their PC.
The IOTA is one of the best paper wallet. The seeds and addresses are generated here offline when the computer is not connected to the internet. Users can keep a record of the seeds and addresses in the KeePass and save it to the USB drive.
Hardware Wallet Vs Paper Wallet – Advantages and disadvantages
- Hardware wallet is more expensive than paper wallet. Paper wallet is invariably cheap.
- Hardware wallets are more safe and secure as compared to paper wallets.
- Paper wallets have risk of loss and damage unlike hardware wallets.
- Paper wallet is simple to use than hardware wallets.
- An important feature is backup in hardware wallet which allows you to restore any data that is lost. No such feature in paper wallet.