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A wallet is a program for receiving, sending and storing bitcoins or other cryptocurrencies. Wallets connect to the blockchain, the accounting book that stores the transactions and balances of a crypto-currency. There are, however, several types of wallets.
The wallets store the private keys – encrypted codes used to generate the public keys and the address where your bitcoins are stored.
A default wallet creates a text file that contains your private key. If someone discovers this key, they can have control over your bitcoins. So it is important to store it securely on an encrypted disk or computer. It is worth even copying it in a paper and hiding it.
HD
Acronym for hierarchical deterministic. They are basically wallets that generate an initial phrase called seed or mnemonic phrase. These are usually words in English that are easier to write than a private key, for example. If the wallet is stolen, for example, just use the word combination to gain access to it again. Therefore words must be kept in absolute secrecy and safety.
Complete x fast
Some wallets store a full blokchain copy. Others, known as SPV, do not have a complete copy of the blockchain. They rely on the complete nodes to which they are connected. Therefore, they are faster and consume less disk space.
Mobile
They are wallets stored in a mobile phone. This is the riskiest option as phones are often stolen. In addition, it can be associated with your mobile number and your geographic location. So bad in terms of privacy. However, they are quite convenient. It is a kind of hot wallet as it is connected to the internet.
Web
They are hot wallets of web services, like an exchange, for example. In this case, the user does not have access to his or her private keys. In addition, they are more vulnerable to hackers. On the other hand, they are very practical and convenient because they allow access at any time. It is important to always look for one that offers two-factor authentication. Ideal for small amounts of bitcoins.
Office
This type of hot wallet stores the users’ private keys on your computer. However, it is a risky method because the computer may be infected with viruses.
Paper
They are simply pieces of paper or notebooks where private keys or phrases are written down. However, paper wallets can easily be destroyed. Therefore, several copies of these notes should be created and kept in a safe place.
Mental
They are a way to create your private key from a random text or predetermined words. However, they are highly likely to be hacked, as people create predictable phrases. Even if it is a secret text, there is a chance that the wallet will be hacked.
Multisig
These are wallets that require the authorization of more than one person within a set of private keys to make the transactions. A couple, for example, can adopt it and the expenses are only authorized if the two are in agreement. The same holds true for those responsible for a company’s payments.
Hardware
They are physical devices specially made to store the private keys so that they can not be pirated. They can even connect to computers with viruses that there is no risk of loss. Most hardware portfolios back up the seed sentence. However, to make the transactions, you will need to connect it to a computer or mobile phone. These wallets offer the optimal combination of security and ease of use.
