Hardware Wallets are very popular nowadays, they have been around for a while now and as the popularity and demand for cryptocurrencies continue to grow new and innovative hardware wallets will be launched to keep up with the demand.
Traditionally people in early days of bitcoin used Desktop Wallets and quite frankly most of us still use them from time to time.
There are 3 kinds of cryptocurrency wallets:
- Paper Wallet
- Software Wallet (Mobile & Desktop)
- Hardware Wallets
Now, I’m not saying that Paper Wallets or Software Wallets are not safe. Some of my friends still use paper wallet and desktop wallets for securing their investment and I personally like to use all 3 methods.
But If you want to really secure your investment then the best option is to use Cryptocurrency Hardware Wallets.
What Is A Paper Wallet?
A paper wallet is used to store cryptocurrencies like Bitcoin, Ethereum, Litecoin and many other coins on a piece of paper, It is one of the oldest ways of securing your cryptocurrency. Paper Wallet contains limited but critical information like your encrypted Wallet Address (Public Address) and the Private Key (Secret Key) for accessing your wallet and for authorizing the transaction. The downside of using a paper wallet for storing cryptocurrency is that if you lose the paper on which you have printed out the Wallet Address (Public Address) and Private Key you will lose access to your coins and you will not be able to access your funds or perform transactions.
How do Paper Wallets work?
The Public and Private Key comprises of two uniquely related encrypted/cryptographic keys which basically contain long random numbers and alphabets. Below is an example of a Public Key.
The Public Key is like a bank account number or account id. It is publicly available and accessible while on the other hand, the Private Key is like a encrypted password which must remain hidden and secure and the owner must keep it confidential.
Software Wallet is user-friendly and is easy to use but the downside of using Software Wallet is that they can easily be hacked. Since, If you use a software wallet you only require a password for accessing your wallet and if someone manages to crack your password they can easily steal your cryptocurrency.
Although if you’re a beginner and want to store only a limited amount of cryptocurrency then you can definitely use a desktop wallet or a mobile wallet. I personally prefer using the Mobile Wallet as it is more convenient and has options like fingerprint and PIN code protection to enhance the security of your wallet.
Software Wallet, unlike the paper wallet, can store multiple cryptocurrencies simultaneously and most of the new wallet such as Exodus, Trust Wallet, Abra, Bread Wallet, and Jaxx also provide you with the option of swapping your cryptocurrencies with having to deposit your funds into an exchange as you can see in the image below.