Wallet types

A crypto wallet is a tool that stores users' private keys, which let them safely interact with blockchain networks. Crypto wallets are used for sending and receiving cryptocurrencies and can be divided into three main classes: software wallets, hardware wallets, and paper wallets.

Software wallets

A software wallet is a program that a user installs on their device—for example, a PC, laptop, or mobile phone. Software wallets can be of three types:

• Desktop wallets: can be downloaded, installed, and run on users' computers. These wallets let users keep and manage private keys locally.
• Web wallets: also known as online wallets. They do not require download or installation because users interact with them through a browser interface. In this case, users' private keys are usually managed by third parties. Web wallets can be further categorized as custodial or non-custodial. Custodial wallets hold users' private keys on their behalf, while non-custodial wallets allow users to have full control over their keys.
• Mobile wallets: similar to desktop ones, these are apps that need to be downloaded and installed on users' mobile phones.

Hardware wallets

Hardware wallets are referred to as cold ones; they don't need an internet connection to generate and store keys. The keys are randomly generated based on specific algorithms and are stored in the device itself. Hardware wallets are generally considered the most secure type of wallet because they keep private keys offline and out of reach of potential attackers.

Paper wallets

Basically, a paper wallet is a piece of paper with a printed blockchain address and its private key. The keys are printed as strings of letters and numbers together with QR codes, which can be scanned for cryptocurrency transactions. Paper wallets are considered cold wallets if they are used to create keys offline. However, paper wallets can be vulnerable to physical damage, loss, or theft, and users need to keep them in a secure and protected place.