What are the different types of blockchain wallets?
Looking for a wallet to store your newly acquired crypto asset? Ever wondered what are the different types of crypto wallets out there? This article will cover all the different types of cryptocurrency wallets available in the market today along with their Pros and Cons.
Suggested Reading: What are the different types of blockchain assets?
1) Web Wallets
As the name suggests, these are website based online wallets which require you to open a URL to access the wallet. Most of the time, these wallets have some kind of account system to login to the wallet.
A wallet on the exchange is also considered as a web wallet since you can store funds inside of it, however, you do not have control of your private keys and 12-words on such exchanges. Non-exchange web wallets give you full control of your private keys and 12-word seed phrase.
Since mobile wallets are online wallets, they carry similar risks as compared to web wallets - attackers can gain access to your wallet using coercive means.
3) Desktop Wallets
Yes, Exodus is a desktop wallet :) As you might have guessed already, these wallets are built to be installed and run on desktop computers and laptops. Desktop wallets are the most popular wallets out there due to the features they can offer on the all-powerful desktop platforms like Windows, MacOS, Linux, etc.
Most multi-currency desktop wallets today come with a big list of supported assets along with additional features like in-built exchanges, portfolio charts, etc.
Apart from Exodus, some other desktop wallets are Jaxx, Electrum, Atomic, etc. The desktop wallet category also includes stand-alone wallets developed by respective asset development teams. Example: Bitcoin Core Wallet, Official Monero Wallet, etc.
Security of a desktop wallet depends on the user since these wallets are online wallets. One must strive to maintain the full security of the system these desktop wallets are installed on.
4) Paper Wallets
Yes, you can store your Bitcoin on a paper! Paper wallets are cold wallets (not connected to the internet) and are usually used for long-term storage of cryptocurrencies. These wallets are also used as gifts - generally to introduce somebody to the crypto world.
The downside of the paper wallet is that it cannot be used for day-to-day transactions like a desktop wallet. Also, paper wallets need a lot of care when storing for the long-term - a paper can be easily destroyed unless secured properly.
If you have a paper wallet and are wondering how to import it into Exodus so you can spend it, here is a guide to help you: https://support.exodus.io/article/87-can-i-import-a-private-key
5) Hardware Wallets
Specially designed hardware devices are considered the best in crypto security for storing one's crypto wealth for the long term. These devices can connect to your computer and mobile via USB ports so you can perform send and receive functions. The security is considered top-class since your keys never leave the hardware device.
These devices come with their own drawbacks though - they aren't very user-friendly for day-to-day transactions, also, most of them lack in-wallet exchange features allowing swapping of one asset for another. Also, one needs to carry the device around if they wish to use it as a day-to-day wallet. For some people, the cost of owning a hardware wallet is too much since most hardware wallets cost upwards of 120 US Dollars.
Examples include Trezor T, Ledger Nano S, KeepKey, etc.
A note on security: Irrespective of what wallet you choose, if you ever expose your 12-word seed phrase or private keys to a malicious actor, your funds can be easily taken away - no wallet provider can help you in getting the stolen funds back as transactions once made on the blockchain cannot be reversed by anybody. Always ensure you store your 12-words and private keys offline - never store them on any device that is connected to the internet, there are 100s of ways hackers can gain access to it online.
Here is a detailed security guide for crypto users: https://support.exodus.io/article/767-how-do-i-keep-my-money-safe