In this article, the focus is on types of wallets and how they work. Everyone is different and so you need to pick a wallet, even wallets that fit with your lifestyle.
You will need to consider how you use a wallet. Some of your currencies might be spent for everyday items and services: shopping, yoga class, and even perhaps paying certain types of bills.
1. Desktop Wallet
This type of wallet is a free download. On the PRO side of the argument, this wallet is secure because it's only accessible on a single device—the computer where you have the download. It is also a cold wallet, so your actual wallet does not connect to the Internet.
On the CON side of the argument, as part of your computing device, it is subject to the ills of your computer. If your computer gets a malware injection, the same hacker could possibly access your private keys. Also, if your hard drive corrupts and you haven't backed-up your system, you could lose your wallet and tokens. Be sure to always keep secure back-ups!!
2. Cloud Wallet
A cloud wallet actually very convenient. It can be used anywhere on the globe. It can also be used on different devices. Having a cloud wallet is like storing your currency on a virtual server in a cloud data center with all of the security services they provide, similar to your email or social media logins.
On the CON side, though, you still might be subject to hacking. For best results, make sure you're observing end user best practices like you would on any business enterprise.That would include options that have multi-signature access.
3. Mobile Wallet
You can download one of these for both iOS and Android. There are many varieties of mobile wallets. One reason for its popularity is the convenience. Some versions are very secure and offer Multi-signature access. These security keys are backup phrases. These backup phrases allow you to access your wallet even if you lose your phone. The convenience of using this wallet anywhere is excellent for making day-to-day purchases. Again, much like a desktop wallet, it is subject to any malware on your phone.
4. Hardware Wallet
Hardware wallets are cold wallets. They're physical devices and work well as “savings” accounts because they're not as effortless to access and currently don't work as well for everyday access. They're like a USB flash drive for offline storage and plug into a computer. Some of these hardware wallets include hardware encryption where a PIN number must be physically entered on the device before accessing the wallet. These are arguably one of the most secure methods of storing cryptocurrency.
5. Paper Wallet
This wallet is easy and secure. It is literally a printout generated from software or even hand written. When you get your public and private keys, you make a copy and store them in a secure location. If using one generated with software, you will likely also get QR codes for your keys. When you want to use the coin, you can perform something called a “sweep,” which transfers public and private keys to a software wallet, allowing you to perform a transaction. It is best to keep multiple backups of your wallet in different locations, perhaps even a safety deposit box. Always remember to guard your private key!
These are the basic types of wallets available. You have virtual or digital wallets--desktop wallets, cloud wallets and mobile wallets. You also have physical wallets--paper and hardware. Each variety offers you a type of usability and security and most users operate multiple wallets. You’ll need to weigh what works best for your lifestyle.