People used to say that cryptocurrency is the future, but the fact is that the future is now!

So it is best to adapt to this modality and learn all about it because it is here to stay.

One of the most essential things everyone needs to know about crypto is crypto-wallets.

There are several types of crypto wallets, and while their names may seem simple, the concept behind them is not.

So let us explain you the types of crypto wallets and the pros and cons of each type.

1.Hot Wallets

Hot Wallets are any type of crypto wallets that remain connected to the Internet.

This means that their accessibility is simple for you, and the funds in them can be easily moved around in moments.

Whenever any bitcoin or other crypto related service pays you instantly, it is through a hot wallet.

Now since they are connected to the Internet, this has significant implications for their convenience and their security.

Being connected to the Internet, hot wallets are a lot more susceptible to attacks from hackers and security breaches.

It is said that most of the big crypto security breaches have occurred with funds kept in a hot wallet.

So the idea that investors try to adhere to is to keep only a small portion of their cryptocurrency in hot wallets and keep the rest in a cold wallet.

The amount in the hot wallet is better for transactions, and so investors tend only to have the money they plan on spending in their hot wallet.

Pros:

• Easier to access with just one PIN
• More convenient to move currency around

Cons:

• Connected to the Internet means hackers can gain access to your account easily compared to cold wallets
• Not favored for storage of huge amounts of currency.

2.Cold Wallets

Cold Wallets or Cold Storage is storing your cryptocurrency away from internet access in an offline manner.

This is usually done to elevate the security of your wallet since in a hot wallet, a PIN is all that a hacker needs to gain to access your cryptocurrency.

In this case, it is much tougher to gain access since there is no Internet for the hacker to enter to your system.

The drawback, of course, is that gaining access and then withdrawing Bitcoin or other forms of cryptocurrency from your cold wallet is not that convenient.

So as mentioned earlier, most holders of digital currency keep some of it in a hot wallet for daily or weekly usage and most of it in a cold wallet.

When there is a major exchange, it often takes a few days for bitcoin owners as they maneuver their digital currency from cold storage wallet to a hot wallet.

Pros:

• Better security due to no digital access to hackers as it is offline
• More favorable for huge amounts of digital currency

Cons:

• Tough to move around and withdraw as the method is much more strenuous.

There are two major types of cold wallets, which are paper and hardware wallets.

a)   Paper Wallets

Paper Wallets are when you store the keys to your cold storage on paper.

These papers have all the information for you to gain access to your cold wallet and consequently need to be safeguarded carefully.

Remember, there are two types of keys, the public, and the private keys. Public Keys are those used by people to send you bitcoin while the private key is the one you use to withdraw money.

So the private key needs to be protected and can be stored in these paper wallets.

These paper wallets have QR codes that can be scanned and used to retrieve your public and private keys whenever you need to make any digital transaction.

Now, these paper wallets are free, and a lot of applications provide you with easy set up of your paper wallet. Any application that asks you to pay for a paper wallet is a hoax.

Now, if you have a private key on a paper wallet and you store it safely, you can rest assured that your bitcoin wallet is completely safe and can stay stored for years to come.

Paper Wallets are great for people that want to keep and store their digital currency for long terms instead of a few short term exchanges.

Pros:

• Free to make with applications that generate random private and public keys
• If stored correctly, it is the most fool-proof method of storing your digital currency.
• It is invulnerable to malware and similar digital threats

Cons:

• Paper may get damaged or lose the ink with time
• The creation process could be more secure

a)   Hardware Wallets

Hardware wallets are a relatively new solution of storing digital currency. This entails storing your bitcoin public and private keys in a hardware device which may be a USB.

Then this hardware is stored in a secure place and can be used whenever you need to make a transaction.

There has not been any recorded incident of a breach in a hardware wallet. But the chance if that exists. Say you lose the USB in which your keys were stored. 

In this case, applications have a 20 word or so seed phrase that you have to answer in order to regain access. And again, this would be on paper and susceptible to ink fading and water.

They are better than hot wallets since they are not accessible by hackers and are preferred to paper wallets by many who do not like the fact that their coveted keys could be destroyed by water or just the ink fading over time.

Most of the applications that offer hardware wallets are paid (you buy the hardware itself) and hence it can be a major investment. Having said that, this would be an excellent investment that you would not regret if you have significant funds that you want to store for long term dividends.

Pros:

• Are not susceptible to the elements, unlike paper wallets.
• Not vulnerable to virus attacks like hot wallets.

Cons:

• The tend to be costly.
• If lost, the retrieval question is on paper, which may again be susceptible to the elements.

So, as may be apparent from this discussion, hardware wallets are one of the most modern and safest ways to store and retrieve digital currencies.

Our Recommendations 

There are many applications that offer hardware wallets and with many copycats around in the market choosing the perfect one can be a bit of a nuisance. So here we have our top three recommendations of hardware wallets.

Ledger

Ledger is one of the most reputable hardware wallet companies in the market right now. With years of experience and dedication, they have climbed to the top of the marketplace.

They use a secure chip for all of their hardware wallets as well as a hardware security module (HSM) which is generally more reserved for the vaults.

Yes, ledger provides an option of opening a vault where you can keep all your cryptocurrency in a totally secure manner.

They aim to provide additional features for these users such as the multisignature, timelock, and multi accounts features.

The two main variants of the ledger wallets are the Ledger Nano-S and the Ledger Nano-X.

The ledger nano x is a lot more expensive and is also deemed as the best hardware wallet in the market right now.

Trezor

The first mainstream hardware wallet was Trezor and it continues to be relevant and effective to this day. 

It looks like a tiny calculator and is not as fancy as some of the other hardware wallet  solutions in the market.

It builds a secure environment in which your keys are safe even if your device is infected by malware.

Every single Trezor hardware has a PIN that is protected and the time after each failed attempt raises exponentially so that taking even 30 false attempts would take more than 16 years. 

If you ever lose it, you can claim your account using a 24 letter phrase that is configured randomly at the time of setting up your account. This phrase or key should be stored carefully as it can be a major liability as explained before.

All these features are designed to keep your keys safe and gives Trezor a spot in our top three.

Keepkey

KeepKey was started six years ago and has slowly emerged as one of the most affordable yet secure hardware wallets in the market.

The box contains the USB, the hardware wallet and the cardboard recovery card, which is better than a simple paper card. 

The interface is simple, and the design is user friendly with a big Led Screen.

The Keepkey hardware wallet has an aluminum back and comes with a button on top which allows you to confirm or cancel any transactions that you may make.

When we talk about the practicality aspect of the device, the Ledger and Trezor wallets do take the lead over Keepkey. 

Keepkey supports much fewer crypto currencies than Ledger or Trezor which may be an issue for some users.

You can buy all these digital hardware wallets easily by clicking on the links below:

Click to buy Ledger Nano

Click to buy Trezor

Click to buy KeepKey