A cryptocurrency wallet resembles a bank account. With it, one can send, receive and store cryptocurrencies. There are several types of wallets, all of which will be elaborated on.
1. Cold Storage (a.k.a. offline wallets)—are the most secure form of cryptocurrency wallets. Offline wallets generate and store the crypto coin’s private keys in an offline environment, away from the internet. So, they are considered much more secure from theft. Cold storage refers to any type of wallet that is independent of any Internet connection and therefore cannot be hacked remotely. Some examples of cold storage wallets are hardware wallets, paper wallets and brain wallets.
2. Hot Wallets—Wallets that are connected to the internet or are stored online. These wallets are suitable for frequent access to the crypto coins. Hence, if you are performing multiple transactions per day this option is more useful than the previously mentioned “Cold Wallets”. Some examples of hot wallets are desktop wallet, mobile wallet and online web wallets.
3. Keychains—while a keychain is not a wallet, it serves the purpose of a wallet. For example, a common misconception about the Ethereum wallet is that it stores tokens. Instead Ether and tokens are stored on the blockchain.