Cryptocurrency or Virtual Currency is very popular today and is being used for making purchases, making online payments securely etc. There are different types of Cryptocurrency wallets that let users store their digital currencies. They can access the bitcoins stored in wallets as and when they need to carry out transactions. You can register at profit revolution software if you want to trade bitcoins!
Many Cryptocurrency buyers and investors wonder how secure these wallets actually are. Before discussing the security aspect, it is important to have a proper understanding of the different kinds of Cryptocurrency wallets that are available.
Types Of Cryptocurrency Wallets
A cryptocurrency wallet can be classified broadly into three categories:
Cryptocurrency software wallets can be divided again into mobile, online and desktop wallets.
- Desktop software wallets: You are supposed to download and install this kind of Cryptocurrency wallet on laptops and desktops. This specific type of wallet comes with some security features, but if your computer gets infected by a virus or is hacked, you might lose your transaction history.
- Online software wallets: Cryptocurrency wallet of this type runs on the Cloud. Naturally, one can access it from any geographical location and with the help of any computing device. Other than being easily accessible, this kind of digital wallet ensures that private keys are stored online. Such types of keys can also be controlled by third parties, however, which make these easily vulnerable to getting stolen or hacked.
- Mobile software wallets: As compared to the other two types, this kind of wallet can be accessed via a smartphone app. You can use it easily almost anywhere, including shopping malls and retail stores. This wallet is simpler compared to traditional desktop wallets. You can access this wallet on your Smartphone and use your cryptocurrencies for digital transactions.
The storage of the private keys of a user is where hardware wallets tend to vary from software wallets. The user keys are stored by hardware wallets in a USB or a similar hardware device. There is additional security with the use of such wallets due to the fact that there is offline storage of private keys.
Hardware wallets are also compatible easily with numerous online interfaces. These can also deal with various currencies. This Cryptocurrency wallet variety also offers greater convenience when it comes to making transactions. When you use such a wallet, you only have to plug it into your PC that is connected to the internet. Next, you have to enter your PIN, get the currency transferred and have the transaction confirmed. The hardware wallets can keep your digital currency stored offline. Naturally, there are reduced risks for security concerns.
This is another user-friendly digital wallet that can provide you with a high amount of security. These Cryptocurrency wallets are referred to as “Paper wallets” because there is a hard copy printout of both private and public keys of a user. However, when the instances are taken in consideration the term “Paper wallet” can also mean a software application that is intended for a secure key before printing.
Using paper wallets is easy. In order to transfer Cryptocurrency to a paper wallet, you are required to transfer funds from your hot wallet to the public address on your paper wallet. Likewise, when you wish to withdraw or spend money, simply have the funds transferred to your software wallet from the paper wallet. Such a process is commonly known as ‘sweeping’.
It is possible to get sweeping performed manually – through the entry of the private keys, or –scanning the QR code available on a paper wallet.
Security Of Cryptocurrency Wallets – Just How Secure Are These?
If you ignorantly transfer your funds to a scammer, you cannot reclaim the money or reverse the transaction. The same is possible if your wallet gets in the wrong hands. So be very careful about the safety of your private keys. Some believe that offline wallets are a better option. It is essential to follow the necessary security measures, irrespective of which type of wallet you choose for safekeeping. You should also be more cautious about the security aspect of your transactions and fund transfers.