There exists various types of cryptocurrency wallets to allow users store and access their digital currencies in different ways. The question that is relevant in this context is how far are these wallets secure. Before taking up the security aspect, it is helpful to understand the various types or varieties of cryptocurrency wallets that exist today.

Cryptocurrency wallet: Types and varieties

These wallets can broadly be classified in 3 categories:

 

 

Cryptocurrency software wallets can again be sub-divided into desktop, online and mobile wallets.

 

 

Difference between hardware and software wallets

Hardware digital wallets vary from the software ones on the aspect of storing a user’s private keys. The hardware wallets store the user keys in a hardware device (for example, the USB). Thus, as the keys are stored offline, these wallets offer an added security. Moreover, hardware wallets are easily compatible with many online interfaces and can also handle different currencies. This variety of cryptocurrency wallets is also easy to make transactions with. As a user, you just need to plug in the device to any computer, which is connected to the web before entering a PIN, transfer the currency and just confirm the transaction. Your digital currency is kept offline by the hardware wallets and thus, the risk factor or security concern is also much lesser. best altcoins to invest in 2021

Paper digital wallets: This range of digital wallets is also user-friendly and ensures a high-level of security. The term “paper wallet” just refers to the hardcopy printout of a user’s both public and private keys. However, considering the instances, it can also refer to a software application meant to generate the keys securely before printing.

Sweeping with paper wallets

Using paper wallets is relatively somewhat easier. In order to transfer any cryptocurrency to your paper wallet, just transfer the funds from the software wallet to the public address, which your paper wallet displays. Similarly, when you want to spend or withdraw your money, just transfer the funds from the paper wallet to your software wallet. This procedure is popularly referred to as ‘sweeping’.

Sweeping can be done either manually, by entering the private keys or scanning the QR code on a paper wallet.

How secure cryptocurrency wallets are

Different varieties of digital wallets offer different levels of security. The security aspect mainly depends on two factors:

 

 

It doesn’t require mentioning, it is much safer to keep the currencies in offline environment, as compared to online. There’s just no way to ignore the security measures, irrespective of the wallet one has chosen. If you lose your private keys, all the money kept in the wallet will be gone away from your hands. On the other hand, if the wallet gets hacked or you transfer funds to a scammer, it won’t be possible to reverse the transaction nor reclaim that money.

 

 

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